8 BASELINES AND OPTIMAL BASELINES

Up to this point, we have compared the results of our optimization run to other optimization runs. However, the goal of most network design projects is to improve an existing supply chain. For example, when you are presenting your results, you may be asked how much money is saved with the new design or how much the service improves. To answer these questions, you need a baseline. A baseline is a model of the existing network.

Equally important, you will also be asked a deeper question: How do you know that your model is valid? The baseline model can solve that problem as well.

It turns out that there are two main baseline models you will want to consider. Each provides its own set of insights. We will call the two models the actual baseline and the optimized baseline. Both are important and both are critical.

Actual Baseline

The actual baseline is a representation of the supply chain exactly as it was run in the past. In practice, most modelers use data from the previous year to build the actual baseline model. In the actual baseline, you have exactly the same mathematical formulation that we’ve previously covered except that you are eliminating any choices for the model.Please make sure the post is between 250 to 300 words.

Application

On page 155 in your Supply Chain Network Design text, answer questions a, b, and c. Prepare a post that addresses your answers and discusses supply constraint issues.
Response Guidelines
Respond to at least two other learners. Your responses to other learners are expected to be substantive in nature and reference the assigned readings, as well as other theoretical, empirical, or professional literature to support your views and writings.
Use these suggestions to create your response post:

How well does your peer consider the facts and information?
Are there additional pieces of information he or she should consider?
What were the similarities and differences in your post?