Professional Documents
Culture Documents
transportation management
Number of
Facilities
Response Time
© 2007 Pearson Education 4-6
The Cost-Response Time Frontier
Local FG
Hi
Mix
Regional FG
Local WIP
Cost Central FG
Central WIP
Inventory
Costs
Number of facilities
Transportation
Costs
Number of facilities
Facility
Costs
Number of facilities
Facilities
Inventory
Transportation
Number of Facilities
© 2007 Pearson Education 4-11
Variation in Logistics Costs and Response
Time with Number of Facilities (Fig. 4.5)
Response Time
Number of Facilities
© 2007 Pearson Education 4-12
Design Options for a
Distribution Network
Two key decisions when designing a distribution
network between pair of stages, such as supplier to the
Manufacturer or even service company serving
through its distribution or FG to its end customers
1. Will product be delivered to the customer location or
picked up from a preordained Site?
2. Will product flow through an intermediary (or
intermediate location)?
Manufacturer
Retailer
Customers
Customers
Factories
Inventory: higher
Transportation :
lower
Facilities: somewhat Warehouse Storage by
higher Distributor/Retailer
Information : simpler
structure
Customers
Factories
Distributor/Retailer
Warehouse
Customers
• Inventory: higher
• Transportation: very higher Product Flow
• Facility handling will be higher
• Information management : Information Flow
© 2007similar
Pearson Education 4-18
Manufacturer or Distributor Storage
with Customer Pickup
Factories
Pickup Sites
Customers
Response Time 1 4 4 3 2 4
Product Variety
4 1 1 2 3 1
Product Availability 2 3
4 1 1 1
Customer Experience
5 4 3 2 1 5
Order Visibility 1 5 4 3 2 6
Returnability 1 5 5 4 3 2
Inventory 4 1 1 2 3 1
Transportation 1 4 3 2 5 1