Information Technology Reference
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Figure 1. Simple product structure
End Product
Module B
Module C
An example of a scenario which a logistics professional may consider could be described as fol-
lows:
End Product will have one customer
End Product will have only one supplier, “End Product Manufacturer”. In this case the End Prod-
uct is produced by the manufacturer itself, but the method also supports the analysis of contract
manufacturers
Module B can be sourced from two suppliers, and the sourcing options are:
Purchase all components from “Supplier 1 for Module B”
Buy 60% of the volume from “Supplier 1 for Module B” and 40% of the volume from “Sup-
plier 2 for Module B”
Module C has two suppliers and the sourcing options are:
Buy 100% of the volume from “Supplier 1 for Module C”
Buy 100% of the volume from “Supplier 2 for Module C”
Evidently the notion of choice and aggregation is vital in formalism for demand supply network
options. Aggregation (AND logic) is needed for situations where a module has several parallel child
modules. Choice (OR logic) is needed to describe alternative suppliers. Moreover, an OR may be im-
mediately followed by an AND if two or more suppliers are simultaneously used to source a component
in a given volume split.
The central idea of the DSNnet is to combine seamlessly the product structure and the associated
demand supply network. The design of a product in parallel with its demand supply network renders a
company's product design process more effective (Prasad, 1986). This mode of operation also requires
specialized tool support. The logistics professional is looking for a tool where he can:
1. Choose the bill of materials for a product (key components)
2. Input the possible suppliers and associated costs for every component
3. Input the customers and their demand volumes
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