[20 points] Describe how increasing or decreasing the number of facilities affect following factors.
Response time
Inventory costs
Transportation cost
Facility cost
Total logistics cost
[20 points]
List and briefly describe the design options for distribution network.
What type(s) of distribution network is (are) typically best suited for commodity items? Provide reasoning to your answer.
What type(s) of distribution network is (are) best suited to highly differentiated products? Provide reasoning to your answer.
[10 points] A group of inventors have designed a portable grill with some unique features. They plan to fund the initial stages of the product lifecycle through a crowdfunding method, such as Kickstarter, and later-on when the product reaches its mature part of the product life cycle, sell the grill through traditional hardware store chains. Do you think their plan of selling channel is a good idea? Discuss your answer.
[10 points]
How do import duties and exchange rates affect the location decision in a supply chain?
How is the rise in transportation costs likely to affect global supply chain networks?
[20 points]
DryIce, Inc., is a manufacturer of air conditioners that has seen its demand grow significantly. The company anticipates nationwide demand for the next year to be 180,000 units in the South, 120,000 units in the Midwest, 110,000 units in the East, and 100,000 units in the West. Managers at DryIce are designing the manufacturing network and have selected four potential sites—New York, Atlanta, Chicago, and San Diego. Plants could have a capacity of either 200,000 or 400,000 units. The annual fixed costs at the four locations are shown in the following table, along with the cost of producing and shipping an air conditioner to each of the four markets. Where should DryIce build its factories and how large should they be? [Hint: use the Excel template of capacitated plant location model]
Production and Transport Costs for DryIce, Inc.
New York
Atlanta
Chicago
San Diego
Annual fixed cost of 200,000 plant
$6 million
$5.5 million
$5.6 million
$6.1 million
Annual fixed cost of 400,000 plant
$10 million
$9.2 million
$9.3 million
$10.2 million
East
$211
$232
$238
$299
South
$232
$212
$230
$280
Midwest
$240
$230
$215
$270
West
$300
$280
$270
$225
[20 points]
StayCool, a manufacturer of high-quality refrigerators in India has one factory, located in Mumbai. Due to rapidly growing demand, the CEO of StayCool has decided to set up another factory to serve its southern markets. The supply chain manager is asked to find a suitable location for the new factory. Four parts plants, located in Chennai, Bengaluru, Hyderabad, and Mumbai, will supply parts to the new factory, which will serve major markets in Andhra Pradesh (AP), Karnataka (KK), Kerala (KL), and Tamil Nadu (TN). The coordinate location, the demand in each market, the required supply from each parts plant, and the shipping cost for each supply source or market are shown in the table below. Find out the location for the new factory which minimizes the total transportation cost. [Hint: use Gravity location model Excel template].
Locations of Supply Sources and Markets for StayCool refrigerators
Sources/Markets
Transportation Cost Rupees/Ton Mile (Fn )
Quantity in Tons (Dn )
Coordinates
xn
yn
Supply Sources
Bengaluru
35
400
300
300
Chennai
32
700
500
300
Hyderabad
28
500
400
825
Mumbai
33
600
100
1100
Markets
Andhra Pradesh
40
450
450
425
Karnataka
40
350
200
400
Kerala
40
400
250
150
Tamil Nadu
40
600
400
200