The various Supply Chain Models through network design methods
The strategic decisions are, for the most part, global and so the models that describe these decisions are huge, and require a considerable amount of data. The operational decisions, on the other hand, address the day to day operation of the supply chain and therefore the models that describe them are often very specific in nature.
The network design methods, for the most part, provide normative models for the more strategic decisions. These models typically cover the four major decision areas described earlier, and focus more on the design aspect of the supply chain; the establishment of the network and the associated flows on them.
These methods determine the location of production, stocking, and sourcing facilities, and paths the product(s) take through them. Such methods tend to be large scale, and used generally at the inception of the supply chain.
The earliest attempt in this network was by Geoffrion and Graves in 1974. They introduced a multicommodity logistics network design model for optimizing annualized finished product flows from plants to the DC’s to the final customers.
Breitman and Lucas, in 1987, tried to provide a framework for a comprehensive model of a production-distribution system, “PLANETS”. This was used to decide what products to produce, where and how to produce it, which markets to pursue and what resources to use.
Cohen and Lee, in 1985 developed a conceptual framework for manufacturing strategy analysis, where they described a series of stochastic sub- models, that considers annualized product flows from raw material vendors via intermediate plants and distribution echelons to the final customers.
Again in 1989, Cohen and Lee presented a normative model for resource deployment in a global manufacturing and distribution network. The cost structure consisted of variable and fixed costs for material procurement, production, distribution and transportation.
Finally, in 1995, Arntzen, Brown, Harrison, and Trafton provided the most comprehensive deterministic model for supply chain management which minimized a combination of cost and time elements. Examples of cost elements include purchasing, manufacturing, pipeline inventory, transportation costs between various sites, duties, and taxes. Time elements include manufacturing lead times and transit times.
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