RSM370H1 Lecture 3: Lecture 3 Planning Demand and Supply in a Supply Chain
Document Summary
Lecture 3: planning demand and supply in a supply chain. September 26, 2018: responsiveness (lots of local stores) comes at cost, centralized warehouse comes at cost of responsiveness. Also leads to higher outbound transportation costs. Not optimal for selling products with low margins online because of outbound transportation cost. Facility decisions: having additional facilities open beyond capacity offers flexibility, duties have impact, future expected value from facility. Uncertainty creates value in keeping additional facilities open. If heavy duties, most cost effective to produce locally to avoid duties. Without duties, can have fewer facilities open and shift production to most cost: decentralized facilities effective facilities. Subject to supply risk: apple used to source some components only in japan, but whole supply chain was impacted during tsunami/earthquake, hedging strategy. Match revenue and cost exposure: produce and sell in same market, flexible strategy. Dynamically hedge uncertainty in demand, exchange rate using available capacity.
