Hint: Information below mighrt be helpful in answering questions above Phase 2:
ID: 450631 • Letter: H
Question
Hint: Information below mighrt be helpful in answering questions above
Phase 2: Regional Facility Configuration
Objective: Define roles, regions, and approximate capacities
Forecast demand by country or region
Identify the role of economies of scale or scope
Identify factors that impact facility location at a regional level
Identify logistics and facility costs at a regional level
In this homework, we will follow the network design framework discussed in class with the goal of improving a supply chain network. Problems are otherwise independent from each other EdgeTex, a manufacturer of high-end computer servers, would like to review their supply chain network. Managers at EdgeTex find that they are spending substantially in transportation and believe that they can reduce costs by adding distribution centers (DCs). 2. (10pt) In Phase 2, EdgeTex would like to decide in which regions of the U.S. to open a distribution center and roughly estimate the number of DCs they need. To do so, they forecast the demand of all markets in each region and solve an optimization model in order to decide in which regions to open a DC. (We will focus on optimization in Problem 4; here, we consider broader questions.) (a) Given EdgeTex's strategy to prioritize responsiveness over efficiency, would you expect them to prefer a higher or lower number of DCs, compared to a strategy that focuses on efficiency? Why? (b) Discuss two factors that EdgeTex may take into account when deciding in which regions to locate their DCs. (c) In the analysis of Phase 2, we consider demand aggregated over entire regions. In Phases 3 and 4, we also consider demand aggregated over entire cities rather than individual customers. Explain why it is reasonable to use aggregate demand data when modeling, rather than using demand data for individual customers.Explanation / Answer
Answer-a The number of DC's should be higher so that the responsiveness of the DC's can be improved. Lesser number of DC's means higher effitiency but at the cost of lower responsiveness. Responsiveness here means the time taken to deal with the demnsd that comes in a short time. Greater number of DC would give more responses. But the effitiency would be lower due to this as the proper capacity utilization wont take place in this situation.
Answer-b The factors that should be considered are:
1. Location of the DC should be decided on the basis of the closeness of DC to the market segment.
2. It also depends on the location of the manufacturing unit.
Answer-c Aggregate demand data is more convinient in case of modeling as there would be more emphasis on finding out the outcomes of the model than to prepare it with complexity.
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