Difference: SupplyChains (8 vs. 9)

Revision 92009-10-06 - MichaelOSullivan

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META TOPICPARENT	name="WebHome"

Supply Chains

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Introduction

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Ganesh and Harrison Ram Ganeshan and Terry P. Harrison. An Introduction to Supply Chain Management. Penn State University

define a supply chain as follows:

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Ganesh and Harrison (Ram Ganeshan and Terry P. Harrison. An Introduction to Supply Chain Management. Penn State University

) define a supply chain as follows:

A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers.

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Figure 1 An example of a supply chain (adapted from Supply Chain Management

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There are 3 types of decisions made in a supply chain, shown in Figure 2. As Figure 2 shows there is a hierarchy inherent in these decisions and the upper level decisions (at the top of the pyramid) directly affect the lower level decisions, for example

the monthly production plan at a manufacturing plant is directly affected by the decision about whether to build the plant or not;

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the daily production levels at a manufacturing plant are directly affected by the monthly production plan.

However, the lower level decisions indirectly affect the upper level decisions, e.g., it is often cheaper to buy land to build a production plant in rural areas, but the day-to-day transportation costs from rural locations may be much higher.

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the daily production levels at a manufacturing plant are directly affected by the monthly production plan. However, the lower level decisions indirectly affect the upper level decisions, e.g., it is often cheaper to buy land to build a production plant in rural areas, but the day-to-day transportation costs from rural locations may be much higher.

Figure 2 Hierarchy of Supply Chain Decisions (adapted from Supply Chain Management

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