When we build a model using expected demand for the next three years, we clearly realize that the demand will be a forecast. Why should you also consider the transportation cost to be a forecast? What does this tell you about the number of significant digits of accuracy you need for transportation costs in your model?
Answer to relevant QuestionsIf the cost of an ocean container from China to Seattle is $3,500 and you can fit 250 units into the container, but on average you put in 200, what is the cost per unit that should be used within a network design model? Open the file Warehouse Costs by Throughput.xls located on the book web site. This file contains the total cost to operate different warehouses by throughput. Run a regression analysis and estimate the fixed and variable ...If your baseline model's costs are within 0.1% of the actual costs, under what conditions might this still not be a valid solution? What are the optimal three warehouses and network total cost if all product comes from China (enter through the Port of Long Beach)? If you run a multi-objective optimization and generate a Pareto optimal set of solutions, what work do you still have to do to determine the best solution for your supply chain?
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