You are in the course MGT260 – Introduction to Business Logistics (High School Dual Credit)
Class 12 ::: Connect
In the short run, a firm’s logistics/supply chain
network and the locations of its key facilities
are givens, and the logistics manager must
operate within the constraints imposed by the
facility locations.
Site availability, leases, contracts, and
investments make changing facility locations
impractical in the short run. In the long run,
however, the design of the overall network
must be thought of as variable.
Several types of change that may suggest a need to reevaluate and/or redesign a firm’s logistics
network, for instance:
 Changing Customer Service Requirements,
 Shifting Locations of Customer and/or Supply Markets,
 Change in Corporate Ownership,
 Cost Pressures,
 Competitive Capabilities, and
 Corporate Organizational Change
The design of a logistics/supply chain network involves six basic steps. First the company
needs to define the design process, and then perform a logistics audit. After that will be
necessary examine the logistics network alternatives, and conduct a facility location analysis.
Finally, the company needs to make decisions regarding the network design and develop an
implementation plan.
The importance of major locational determinants varies
among industries and individual companies.
Labor-intensive industries such as textiles, furniture, and
household appliances place more emphasis on favorable
labor climate and labor rates than do high-tech industries
such as engineering and scientific instrument
manufacturers.
Logistics variables are important in industries such as
drugs, beverages, and printing and publishing.
The major general locational determinants identified are: labor climate, availability of
transportation, proximity to markets and customers, quality of life, taxes and industrial
development incentives (for example free trade zones) , supplier networks, land costs and
utilities, and company preference.
The modeling approaches to design of a logistics/supply chain network are classified as:
 Optimizing
(this model seek the “best” answer given the way in which the problem is
formulated)

Heuristic
(this model do not generate a “best” solution, but produce a good first
approximation)

Simulation
(this model develops a computer representation of a logistics system, manipulates
key variables and provides logistics managers with a helpful test medium for
evaluating alternative logistics strategies)
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