Network design decisions

In general, supply chain simulation can be used along the lifecycle of supply chains, that is from supply chain design to support of supply chain operation. In supply chain design, simulation models can support supply network design (decisions on the location, ramp up or shutdown of production or warehousing sites) as well as the adjustment of control parameters such as safety stock at different... 

Genetic Algorithms (GA) are used in case of large combinatorial problems and can be applied e g. for example in complex value chain network design decisions (Chan/Chung 2004)... 

Profit III tries to match the EBT level not considering taxes on a tactical value chain planning level, taxes are not decision-relevant for a global value chain strategy and network design decisions, taxes are of course an important parameter to consider when deciding on sites and locations in the value chain network... 

Figure 10 also explains why any production network design decision in specialty chemicals needs to take into account the interdependencies between the two perspectives. Restructurings at the value chain level usually affect several production sites. The decision to relocate a value chain s production to a different site may for example endanger the cost competitiveness of the entire site if a large share of the site s fixed costs was absorbed by this value chain. Similarly, the decision to close a production site generally affects multiple value chains and may require network redesign projects for each value chain to decide on how to redistribute production. 

As discussed in Chapter 2.1.2, this work focuses on production network design. Consequently, the classification only lists models that include production network design decisions. For reviews and further references related to distribution network design the reader is referred to Tsiakis et al. (2001), Geoffrion and Powers (1995) or Aikens (1985). 

As argued in Chapter 2.1.2 this work focuses on production network design. Demand is assumed to be independent of production network design decisions and the cost structure achieved. Also, unlimited quantities of raw materials are assumed to be available. An extensions to include make-or-buy decisions (and possibly vendor selection) is provided to accommodate application cases where sourcing decisions have to be included. 

There are many aspects which effects customer service. Some of them are directiy influenced by the structure of the distribution network [3] response time, product variety, product availability, customer experience, time to market, order visibility, and retumability. These factors, as explained below, affect supply chain network design decisions. 

Transportation network design decisions are affected by the cost of opening new facilities, holding inventory costs, inbound, outbound logistic costs among others. 

Fig. 6.2 Network design decision framework, adopted from Chopra and Meindl (2007)...

The supply chain network design decisions and their performances from the multi-criteria model solved by P-GP, NP-GP, and the interactive method are summarized in Tables 7.10 and 7.11. 

Chapter 7 incorporates disruption risk in a supply chain network design model. Supply chain network design decisions that determine the number and location of facilities and the selection of transportation modes have a significant impact on competitive performance. However, facilities and transportation links are susceptible to disruptions. In addition, they have different capacities to cope with those disruptions, which contribute to supply chain resilience. This chapter provides a framework to quantify the risk level of supply chain nodes and links. Then, a multiple objective optimization model is presented for designing a resilient supply chain network, with an emphasis on balancing the cost, responsiveness, and risk of the supply chain. 

Identify factors influencing supply chain network design decisions. 

Develop a framework for making network design decisions. 

In this chapter, we start with the broad supply chain design discussed in Chapter 4 and focus on the fundamental questions of facility location, capacity allocation, and market allocation when designing a supply chain network. We identify and discuss the various factors that influence the facility location, capacity, and market allocation decisions. We then establish a framework and discuss various solution methodologies for network design decisions in a supply chain. 

Supply chain network design decisions include the assignment of facility role location of manufacturing-, storage-, or transportation-related facilities and the allocation of capacity and markets to each facility. Supply chain network design decisions are classified as follows ... 

Network design decisions have a significant impact on performance because they determine the supply chain configuration and set constraints within which the other supply chain... 

Following a merger, consolidating some facilities and changing the location and role of others can often help reduce cost and improve responsiveness because of the redundancies and differences in markets served by either of the two separate firms. Network design decisions may also need to be revisited if factor costs such as transportation have changed significantly. In 2008, P G announced that it would rethink its distribution network, which was implemented when the cost of oil was 10 per barrel. ... 

In this section we examine a wide variety of factors that influence network design decisions in supply chains. 

Macroeconomic factors include taxes, tariffs, exchange rates, and shipping costs that are not internal to an individnal firm. As global trade has increased, macroeconomic factors have had a significant influence on the success or failure of supply chain networks. Thus, it is imperative that firms take these factors into account when making network design decisions. 

Managers should keep the following issues in mind when making network design decisions for a... 

Identify factors influencing supply chain network design decisions. Broadly speaking, network design decisions are influenced by strategic, technological, macroeconomic, political, infrastructure, competitive, and operational factors. 

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