1.

In Network optimization cases, the model needs to compare a vast number of options which
makes it heavy and time consuming. It is advised to reduce the number of variables
wherever feasible. One way to do this is to aggregate data, in a manner which is not likely
to impact the optimization calculations.
Formulate appropriate aggregation strategy for
a. Materials
b. Customers

Aggregation strategy for Material:

All the material provided in the list has material type as ZFIN, which means finished product.
Material can be stored in a central warehouse rather than having in 2 separate factories. Planning
and the purchasing of raw materials and other components for both the factories which supplies
the organization with finished goods will be done at a centralized location as shown:

South Factory

Central
Suppliers
Procurement

North Factory

Advantages:
1. Organization will have control over the management of material
2. Materials requirements planning, ordering, inventory control, accounting etc. becomes
centralized
3. Company X can use advanced ERP tool like sap to integrate all the departments like sales
department, purchasing department, Production Planning, HR and so on
4. Better negotiation with suppliers
5. Process standardization will help in having a consistent behavior among supply chain
partners
6. Centralized ordering will lead to tighter cost control and the cost contributing factors in
the conversion of RM into FG can be better monitored and required action could be taken
7. Economies of scale could be achieved
Aggregation strategy for Customers:
From Customer Sales Order Data v1.0, we could see the customers are from all over the India.
Timely delivery leads to better customer service so keep that in mind we are diving the whole
India in 4 separate zones east, west, north and south with Chennai, Delhi, Gujarat and Kolkata
respectively as main DC. Rest other DCs would work under these 4 main distribution center.
We are not keeping any DC at Bangalore because of the presence of main factory in Bangalore
which will act as DC too.

Zone DC clubbed as per States in a Zone

East-Kolkata West Bengal, Bihar, Jharkhand, Odisha
West-Gujarat Dadra and Nagar Haveli, Daman and Diu,
Goa, Gujarat, Maharashtra, Rajasthan.
North-Delhi J&K, HP, Punjab, Chandigarh, Uttarakhand,
Haryana, Rajasthan, UP
South-Bangalore Andaman and Nicobar Islands, AP,
Karnataka, Kerala, Tamil Nadu,Telangana