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The Definitive Guide to Modern Supply Chain Management (Collection) by Sara Lewis, Michael Watson, John Bell, Thomas J. Goldsby, Peter Cacioppi, Jay Jayaraman, Chuck Munson, Chad W. Autry, Mark A. Moon

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9. Three-Echelon Supply Chain Modeling

Up to this point, we’ve considered only a two-echelon supply chain—a facility and the customers it services. You have seen how optimizing the two-echelon supply chain can address many types of problems. However, by adding an echelon, we can capture yet another important trade-off in supply chain modeling: Should your facilities be closer to the source of the product or to the destination?

One type of three-echelon supply chain may include a set of plants or suppliers that ship to warehouses, and then the warehouses, in turn, ship to customers. Alternatively, we may consider a supply chain in which a group of raw material suppliers ships to a plant, and the plant then ships to the customers. In fact, after ...

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