Professional Documents
Culture Documents
• Given that the goal is to maximize the supply chain surplus (profitability), a
number of factors were taken in consideration in order to decide which
facility will produce and ship a customer order.
• The most important factor is the cost, including production and
transportation cost to the customer
• Other factors include availability of production capacity and know-how at a
specific facility, other orders in production to the specific customer or to
customers nearby, etc.
• Another strategy is to “allocate” product lines to specific facilities, and then
direct the orders to the facility “assigned” to the specific product. This way,
there is increased sophistication developed in each facility about a specific
product line, thus saving on production time, setup production costs,
inventory costs, and more
1b. What factors did Gateway consider when deciding
which plants to close?