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

Learning Objectives

1. Describe what a third-party logistics

provider is

2. Assess the major issues that need to be

considered in locating a plant or warehouse facility

used to narrow potential location sites

4. Set up the transportation model to analyze

location problems and how to use Excel

producing, and distributing material and

product in the proper place and in the proper quantities

functions when the movement is on a global scale

company used to manage all or part of

another company’s logistics functions

Logistics Decisions

Multimodal

solutions

are the

norm

Warehouse Activities

Facility Location Issues

Facility Location Issues

Plant Location Methods

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

Example – refinery location factors

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

2

5

7 9

Example 14.1

Example 14.1

Centroid Method

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

formulas used to compute

the coordinates of the

two-dimensional point that meets

d ix = X coordinate of the i th

location

d iy – Y coordinate of the i th

location

Example 14.2

Service Facility Location