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SCM - Chapter 05 (Network-Design)
SCM - Chapter 05 (Network-Design)
Inventory cost
Facility cost
Transportation cost
Number of Facilities
Phase II: Regional facility
configuration
• Important Factors:
• Regional demand
• Production technologies and economies of scale
and scope
• Tariffs and Tax incentives
• Infrastructure factors
• Political, exchange rate and demand risk
• Competitive Environment
Regional demand
a b
Total demand = 1
• Source Facility: Low cost facility for global production – facilities with
more strategic role in the SC, resulting from the evolution of good offshore
facilities