Lecture Operations and supply chain management: The Core (3/e) – Chapter 14: Location, logistics, and distribution

The main goals of this chapter are to: Describe what a third-party logistics provider is, assess the major issues that need to be considered in locating a plant or warehouse facility, learn how a factor-rating system can be used to narrow potential location sites,...

Location, Logistics, and Distribution Chapter 14 McGraw­Hill/Irwin         Copyright © 2013 by The McGraw­Hill Companies, Inc. All rights reserved Learning Objectives Describe what a third-party logistics provider is Assess the major issues that need to be considered in locating a plant or warehouse facility Learn how a factor-rating system can be used to narrow potential location sites Set up the transportation model to analyze location problems and how to use Excel Solver to find solutions to these models Understand the centroid method for locating entities such as cell phone communication towers 14­2 Logistics    Logistics - the art and science of obtaining, producing, and distributing material and product in the proper place and in the proper quantities International logistics - managing these functions when the movement is on a global scale Third-party logistics company - an outside company used to manage all or part of another company’s logistics functions 14­3 Logistics Decisions Multimodal solutions are the norm 14­4 Warehouse Activities 14­5 Facility Location Issues 14­6 Facility Location Issues 14­7 Plant Location Methods 14­8 Factor-Rating System       Most widely used List of factors is developed Range of possible points assigned to each factor Each site is rated against each factor The sums of assigned points for each site are computed The site with the most points is selected Example – refinery location factors 14­9 Linear Programming – Transportation Method   Transportation method is a special linear programming method Seeks to minimize costs of shipping n units to m destinations or its seeks to maximize profit of shipping n units to m destinations A B 14­10 Example 14.1 14­11 Example 14.1 Excel: US Pharmaceutical 14­12 Centroid Method  Used for locating single facilities that considers existing facilities, the distances between them, and the volumes of goods to be shipped between them    Assumes inbound and outbound transportation costs are equal Does not include special shipping costs for less than a full load This methodology involves formulas used to compute the coordinates of the twodimensional point that meets the distance and volume criteria stated above Cx =X coordinate of centroid Cy =Y coordinate of centroid dix =X coordinate of the ith location diy – Y coordinate of the ith location Vi – volume of goods moved to or 14­13 th from the i location Example 14.2 Excel: Centroid Calculation 14­14 Service Facility Location 14­15 ... the art and science of obtaining, producing, and distributing material and product in the proper place and in the proper quantities International logistics - managing these functions when the movement... facilities that considers existing facilities, the distances between them, and the volumes of goods to be shipped between them    Assumes inbound and outbound transportation costs are equal Does... against each factor The sums of assigned points for each site are computed The site with the most points is selected Example – refinery location factors 14­9 Linear Programming – Transportation