Factors affecting when design network of supply chain
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Background of Optimization
Many supply chain practitioners use the word "optimization" as the synonym for "improvement" or "enhancement". However, an optimization is actually the mathematical technique aims to find the best possible solutions. Supply chain optimization is then the application of mathematical models to find the solutions that minimize total costs or maximize overall profits.
Application of Supply Chain Optimization
Optimization is widely used to create the best possible production plan or to find the shortest delivery routes. At strategic level, it's used to find the best way to configure a supply chain network such as,
- How many warehouse a company should have?
- Location and size of each warehouse?
- Product assignment to each warehouse?
- Which customer receives which product from where?
Since supply chain network design is the analysis that will be done every 2-3 years only, many people are not familiar it. But, when it's done right, the potential cost saving is monumental. Luckily, Professor David Simchi-Levi of MIT has explained about this in his award winning book "Designing and Managing the Supply Chain" and the important factors are summarized as below,
Many supply chain practitioners use the word "optimization" as the synonym for "improvement" or "enhancement". However, an optimization is actually the mathematical technique aims to find the best possible solutions. Supply chain optimization is then the application of mathematical models to find the solutions that minimize total costs or maximize overall profits.
Application of Supply Chain Optimization
Optimization is widely used to create the best possible production plan or to find the shortest delivery routes. At strategic level, it's used to find the best way to configure a supply chain network such as,
- How many warehouse a company should have?
- Location and size of each warehouse?
- Product assignment to each warehouse?
- Which customer receives which product from where?
Since supply chain network design is the analysis that will be done every 2-3 years only, many people are not familiar it. But, when it's done right, the potential cost saving is monumental. Luckily, Professor David Simchi-Levi of MIT has explained about this in his award winning book "Designing and Managing the Supply Chain" and the important factors are summarized as below,
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