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.

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).


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