Solution for Supply Chain Network Design: Applying Optimization and Analytics to the Global Supply Chain 1st Edition Chapter 9, Problem 1

by Michael Watson Sara Lewis Peter Cacioppi Jay Jayaraman
106 Solutions 14 Chapters 18736 Studied ISBN: 9780133017373 Supply Chain Management 5 (1)

Chapter 9, Problem 1 : 1. Based on the results seen previously in...

1. Based on the results seen previously in this chapter, as well as your running of these scenarios on your own through the model and PowerPoint referenced previously, review the new locations selected as the model solves for scenarios with two to five optimal warehouses and then explain:

a. How much impact did the change from Phoenix to Las Vegas have? Why?

b. What is the rate of change in the savings as each additional warehouse is added?

Step-By-Step Solution

1. These models have been run in the book and shown in the PPT. The following table shows the costs.

For Part a, the key point is to compare the S2 with S2—we have just replaced LV with Phoenix. You can see that this results in only a $4M increase in cost (compared with the $58M total savings from the baseline). The key insight here is that moving to Columbus was the big saver.

For Part b, the key insight is that the rate of savings decreases as we add warehouses.

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