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Efficient location of industrial activity cells in a global supply chain

Author

Listed:
  • Bogataj, Marija
  • Grubbström, Robert W.
  • Bogataj, Ludvik

Abstract

Inefficient locations for production, distribution and reverse logistics plants will result in excess costs no matter how well material requirements planning (MRP), inventory control, distribution and information sharing decisions are optimized. In this paper we study ways in which aspect of activity cell location decisions can be analyzed within an extended MRP model. This model has previously been extended by including distribution and reverse logistics components in a compact form, presented in Grubbström et al. (2007). Our aim is to demonstrate the basic differences between an approach to location problems with MRP "under the same roof" as the global supply chain, in which transportation time delays and direct transportation costs have substantial influence. We discuss possibilities of how to present location aspects in the supply chain model obtained from combining input-output analysis and Laplace transforms in four sub-systems, namely manufacturing, distribution, consumption and reverse logistics, and show how the transportation costs and lead time influenced by the location of all these activities affect the resulting net present value (NPV). Our aim is to build a model supporting decisions concerning the structure of a supply chain as an alternative to a mixed integer programming formulation. The model developed is based on the use of continuous functions describing spatial distributions of cost and customer demand. Continuous functions are embedded in the MRP extension previously introduced in Grubbström et al. (2007). Location decisions influence (i) production costs, because timing influences the cost of activities involved in creating a product, cf. (Grubbström and Bogataj, submitted for publication), and (ii) logistics costs, which refer to the procurement and physical transmission of materials through the supply chain. In this current paper we wish to combine both of these aspects into a comprehensive model, where we show the interaction between the "space of flows" and the "space of places" as Giovanni Arrighi distinguishes one from the other in his book The Long Twentieth Century.

Suggested Citation

  • Bogataj, Marija & Grubbström, Robert W. & Bogataj, Ludvik, 2011. "Efficient location of industrial activity cells in a global supply chain," International Journal of Production Economics, Elsevier, vol. 133(1), pages 243-250, September.
  • Handle: RePEc:eee:proeco:v:133:y:2011:i:1:p:243-250
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    Citations

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    Cited by:

    1. Danijel Kovačić & Marija Bogataj, 2013. "Reverse logistics facility location using cyclical model of extended MRP theory," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 21(1), pages 41-57, June.
    2. Bogataj, Marija & Grubbström, Robert W., 2013. "Transportation delays in reverse logistics," International Journal of Production Economics, Elsevier, vol. 143(2), pages 395-402.
    3. Govindan, Kannan & Soleimani, Hamed & Kannan, Devika, 2015. "Reverse logistics and closed-loop supply chain: A comprehensive review to explore the future," European Journal of Operational Research, Elsevier, vol. 240(3), pages 603-626.
    4. Danijel Kovačić & Eloy Hontoria & Lorenzo Ros-McDonnell & Marija Bogataj, 2015. "Location and lead-time perturbations in multi-level assembly systems of perishable goods in Spanish baby food logistics," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 23(3), pages 607-623, September.
    5. Jesús F. Lampón & Pablo Cabanelas-Lorenzo & Santiago Lago-Peñas, 2013. "Why firms relocate their production overseas? The answer lies inside: corporate, logistic and technological determinants," Working Papers 2013/3, Institut d'Economia de Barcelona (IEB).
    6. Kovačić, Danijel & Usenik, Janez & Bogataj, Marija, 2017. "Optimal decisions on investments in Urban Energy Cogeneration plants – Extended MRP and fuzzy approach to the stochastic systems," International Journal of Production Economics, Elsevier, vol. 183(PB), pages 583-595.
    7. Bogataj, D. & Aver, B. & Bogataj, M., 2016. "Supply chain risk at simultaneous robust perturbations," International Journal of Production Economics, Elsevier, vol. 181(PA), pages 68-78.
    8. repec:eee:proeco:v:194:y:2017:i:c:p:113-125 is not listed on IDEAS
    9. repec:eee:proeco:v:193:y:2017:i:c:p:51-62 is not listed on IDEAS

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