Supply Chain Management

Chapter 5 : Facility Network Design

Factors Influencing Facility Network Design Decisions

Strategic Factors Technological Factors
Tariffs and Tax Incentives Political Stability Infrastructure Proximity to Suppliers, Resources and Markets
Facility Costs Other Factors

Facility Network Design Process

Developing a Supply Chain Strategy
Studying the Regional Market Configuration Identifying a Set of Potential Sites
Selecting the Location

Models for Facility Network Design and Capacity Allocation

Gravity Location Models Linear Programming Models
Simulation Technique.

Chapter Summary

Facility network design decisions are important decisions in supply chain management. Facilities that are present in a supply chain are locations at which material, work-in-progress, or finished inventories are handled and stored. Facility decisions have to be taken after proper evaluation. Once the facility is set up, it is very difficult to close it down or shift it to another place because of the huge capital investment involved.

Facility decisions have a profound impact on business operations. This is because, within the facility network, the company has to move the inventory, transport goods and exchange information so as to cater to the needs of customers at minimal costs. In this chapter we first examined the factors that influence facility network design decisions. Next, we discussed the framework for taking facility decisions. Finally, we discussed the techniques used in facility network design decision making.

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