3. The Logistics Network consists of:
Facilities:
Vendors, Manufacturing Centers, Warehouse/
Distribution Centers, and Customers
Raw materials and finished products that flow
between the facilities.
6. What must be determined:
• the appropriate number of warehouses
• the location of each warehouse
• the size of each warehouse
• Allocate space for products in each warehouse
• which products customers will receive from
each warehouse
7. Strategic Planning: Decisions that typically involve
major capital investments and have a long term effect
1. Determination of the number, location and size of
new plants, distribution centers and warehouses
2. Acquisition of new production equipment and the
design of working centers within each plant
3. Design of transportation facilities, communications
equipment, data processing means, etc.
8. Tactical Planning: Effective allocation of
manufacturing and distribution resources over a
period of several months
1. Work-force size
2. Inventory policies
3. Definition of the distribution channels
4. Selection of transportation and trans-shipment
alternatives
9. Operational Control: Includes day-to-day
operational decisions
1. The assignment of customer orders to individual
machines
2. Dispatching, expediting and processing orders
3. Vehicle scheduling.
10. Pick the optimal number, location, and size of
warehouses and/or plants
Determine optimal sourcing strategy
◦ Which plant/vendor should produce which
product
Determine best distribution channels
◦ Which warehouses should service which
customers
11. Design or configure the logistics network so as
to minimize annual system-wide cost subject
to a variety of service level requirements
12. The objective is to balance service level against
• Production/ purchasing costs
• Inventory carrying costs
• Facility costs (handling and fixed costs)
• Transportation costs
That is, we would like to find a minimal-annual-
cost configuration of the distribution network that
satisfies product demands at specified customer
service levels.
13. Mapping
◦ Mapping allows you to visualize your supply
chain and solutions
◦ Mapping the solutions allows you to better
understand different scenarios
◦ Color coding, sizing, and utilization indicators
allow for further analysis
14. Data
◦ Data specifies the costs of your supply chain
◦ The baseline cost data should match your
accounting data
◦ The output data allows you to quantify
changes to the supply chain
Engine
◦ Optimization Techniques
15.
16.
17. 1. A listing of all products
2. Location of customers, stocking points and
sources
3. Demand for each product by customer location
4. Transportation rates
5. Warehousing costs
6. Shipment sizes by product
7. Order patterns by frequency, size, season,
content
8. Order processing costs
9. Customer service goals
18. Customers and Geocoding
Sales data is typically collected on a by-
customer basis
Network planning is facilitated if sales data is in
a geographic database rather than accounting
database
1. Distances
2. Transportation costs
New technology exists for Geocoding the data
based on Geographic Information System (GIS)
19. Geocoding is the process of finding associated
geographic coordinates (often expressed as
latitude and longitude) from other geographic
data, such as street addresses, or zip codes
(postal codes).
A geographic information system (GIS) lets us
visualize, question, analyze, interpret, and
understand data to reveal relationships,
patterns, and trends