Facilities Decisions

Abstract

There are three fundamental questions to be addressed. How many facilities do we need? Where should they be located? And what types of facilities are required? This chapter considers the essential functions formed by facilities, i.e. to create stockholding from which to service the needs of production and customers; to act as an assurance against production failures; to absorb the benefits of economic production runs; to provide buffer stocks to meet fluctuating and uncertain sales demands; to maximize the benefits of procurement economies; and to provide support for marketing and sales activities. The type of warehouse facility required depends largely upon product characteristics, market demand volume and, of course, customer service requirements. Product characteristics determine storage and handling methods; rate of sale and sales volumes influence the methods used to process and progress orders; and customer service requirements influence lead time responses which in turn can influence the selection of materials handling equipment.