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Facility Location Planning and Network Design

In: Global Supply Chain and Operations Management

Author

Listed:
  • Dmitry Ivanov

    (Berlin School of Economics and Law)

  • Alexander Tsipoulanidis

    (Berlin School of Economics and Law)

  • Jörn Schönberger

    (Technical University of Dresden)

Abstract

This chapter starts with an outline of a recent real-world location planning problem. It provides the analysis of different decision tasks in a typical location planning scenario and reveals the interactions between individual decision situations of the tasks. The generic decision task regarding which regions should be incorporated into a supply network is addressed. A further part is dedicated to the identification of explicit location proposals for those regions that contribute to supply chain cost efficiency. The multiple factor search for the right location for a facility in a region is addressed in the final section. The chapter is completed by the respective E-Supplement providing additional case studies, Excel templates, tasks and video streams. We have already discussed the performance, success, and failures of SCs. Now it is time to discuss approaches for creating such a network. In particular, it is necessary to clarify important decisions that must be made in order to finally set up a SC. Such a network setup comprises both decisions about the usage and installation of network nodes (represented by factories and/or warehouses or any other immobile equipment such as supply regions or markets) as well as transportation links connecting different network nodes in order to enable the flow of materials as well as information between these nodes. In order to set up a supply network, we have to cope with the challenge that long-lasting SC design (SCD) decisions (with several years of validity) have to be coordinated with mid-term network configuration decisions (commitments for some weeks or months) as well as with operational deployment decisions. This chapter starts with an outline of a location planning problem in Sect. 7.1. Next, in Sect. 7.2, we analyze different decision tasks in a typical location planning scenario and reveal the interactions between individual decision situations of the three aforementioned categories (long-, mid- as well as short-term planning). The generic decision task regarding which regions should be incorporated into a supply network is addressed in Sect. 7.3. Section 7.4 is dedicated to the identification of explicit location proposals for those regions that contribute to SC cost efficiency. The multiple factor search for the right location for a facility in a region is addressed in Sect. 7.5.

Suggested Citation

  • Dmitry Ivanov & Alexander Tsipoulanidis & Jörn Schönberger, 2019. "Facility Location Planning and Network Design," Springer Texts in Business and Economics, in: Global Supply Chain and Operations Management, edition 2, chapter 7, pages 155-202, Springer.
    • Handle: RePEc:spr:sptchp:978-3-319-94313-8_7
    DOI: 10.1007/978-3-319-94313-8_7
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