Gravity method as suggested by (Chopra and Meindl, 2010) can be

useful to identify new global distribution center for ASML. As first step

mentioned by (Chopra and Meindl, 2010) it is necessary to identify the

geographic location where potential site will be considered. Gravity model can

help determine location which can minimize the cost of transporting parts. A gravity

model assumes that both markets and supply sources can be located as grid

points on plane. Here gravity model is

discussed because it is suitable for locating a single facility. As ASML

decides to open one global distribution center this model can help ASML is

identifying optimal location for its global distribution center (Chopra and

Meindl, 2010). The inputs for this model are:

, :

Coordinate location of either a market or supply source n

:

Cost of shipping one unit for one mile between the facility and either market

or supply source n

:

Quantity to be shipped between facility and market or supply source n

If (x,y) is the location selected for the facility , the distance between facility (x,y) and the supply source

or the market n is given by :

= ( 1.1)

The total transportation cost (TC) is given by

TC= (1.2)

The optimal location is the one that minimizes total TC in

equation 1.2. By using this method one can identify the coordinates for new

location of global distribution center. This model has limitations as the

coordinates provided by this model may not correspond to a feasible solution. (Chopra

and Meindl, 2010). Advanced software which use discrete modelling or linear

programming can be used to model more parameters to identify ideal location.

1.

Trade of principles and concept:

“A network designer needs to consider product characteristics as well as

network requirements when deciding on the appropriate delivery network.”

(Chopra and Meindl, 2010, pp 93-94).

For ASML trade of principle

is cost and service level, ASML strives to increase its responsiveness towards

the customer, for this reason cost is a trade – off with service responsiveness

towards its customers. Having more distribution centers can increase the costs

significantly, but if this trade off increases service level towards customers,

ASML would invest in having more regional distribution networks (Chopra and

Meindl, 2010).