A B C D E F

1 Number of facilities
2
3 Number of locations Inward transport Operating costs Outward transport Total cost
4 1 120 11 9 140
5 2 75 26 10 111
6 3 52 35 12 99
7 4 37 41 14 92
8 5 26 47 17 90 Minimum
9 6 20 53 22 95
10 7 17 59 27 103
11 8 14 64 35 113
12 9 12 68 45 125
13 10 10 70 58 138
14
15
16
17
18
19 160
20
140
21
22 120
23
24 100
25
Cost

80
26
27 60
28
29 40
30
20
31
32 0
33 1 2 3 4 5 6 7 8 9 10
34
35 Number of locations
36
Inward transport Operating costs Outward transport Total cost
37
38

Figure 8.1 Variation in costs with number of facilities

 M ission
Highe r strate gic
Corporate strate gy
de cisions
Busine ss strate gy

Functional strate gy
Logistics
strate gy
Logistics strate gy

Numbe r of facilitie s
Strate gic
Location of e ach
logistics plans
Capacity of e ach

Aggre gate plans

Tactical logistics
plans
M aste r sche dule

Ope rational
Short-te rm sche dule s
logistics plans

Figure 8.2 Hierarchy of planning decisions

Figure 8.3 The bottleneck in a supply chain limits overall capacity
 1. Consider
demand and 2. Find the cpacity
Forecasts of
translate this into a already avalable in
demand
required capacity the supply chain

3. Identify
mismatches
between the
capacity needed
and available

4. Suggest
alternative plans for
overcoming any
mismatch

5. Compare these
Look for
plans and find the
improvements
best

Is the result
No
satisfactory?

Yes

6. Implement the
best plan

Figure 8.5 Procedure for capacity planning

 Figure 8.7 – alternative timing of
capacity increases
Quantity

Capacity

Demand

Time
Quantity
a) Capacity more or less
matches demand

Time
Quantity b) Capacity leads demand

Time

c) Capacity lags demand

Figure 8.8 – Alternative sizes of capacity increases

Quantity

Capacity

Demand

Time
a) Few, large increases

Quantity

Time
b) More, smaller increases
 Figure 8.9 Typical shape of a learning curve

Time needed for each repetition

Number of repetitions
Figure 8.10 Identifying the optimal time between maintenance
Revise plans Revise plans Revise plans
- fixed for period A - fixed for period B - fixed for period C
- tentative for B - tentative for C - tentative for D
- outline for C - outline for D - outline for E

Period A Period B Period C Time

Planning cycle

Planning horizon

Figure 8.11 Revision of plans during cycles