Describe how you would model the associated products in each situation:
a. A German chemical company produces five different liquid chemical products (Liquid Products A through E for this example). These liquid products are often sold together in fifty-liter containers to regional manufacturing plants that in turn produce different blends of cleaning fluids then sold in the consumer market. Liquid Product B, however, is also a special chemical, essential to assisting with the emergency cleanup of oil spills around the world. The modelers have decided to model two product groups in this case: one called regular and one called emergency. The regular product grouping consists of Products A through E, including the orders for Product B not for emergency purposes. The emergency product grouping consists of Product B, orders related to the emergency purposes only. Why is this decision appropriate?
b. A Canadian tire distributor sells thousands of different automobile tires to privately owned car-repair garages across the country. The distributor locations receive truckload deliveries of tires weekly from a single wholesale company operating one central distribution center in Canada. Each tire has a specific tread and thickness and thus requires a specific part number during ordering. The distributor has recently decided to expand its footprint to servicing markets in the U.S. and therefore is looking to complete a network design study to determine the best locations for two additional distribution centers within the northern U.S. Why is this team able to model their network design problem with just one product group?
If this distributor decided to switch to sourcing its tires directly from the tire manufacturers instead of the wholesaler, they would then need to switch to include numerous product groupings in their model. Why is this? What would be the basis for these new product groupings?