A Location-Inventory Model for Large Three-Level Supply Chains

We study the location-inventory problem in three-level supply networks. Our model integrates three decisions: the distribution centers location, flows allocation, and shipment sizes. We propose a nonlinear continuous formulation, including transportation, fixed, handling and holding costs, which decomposes into a closed-form equation and a linear program when the DC flows are fixed. We thus develop an iterative heuristic that estimates the DC flows a priori, solves the linear program, and then improves the DC flow estimations. Extensive numerical experiments show that the approach can design large supply networks both effectively and efficiently, and a case study is discussed.


Published in:
Transportation Research Part e Logistics and Transportation Review, 48, 2, 485-202
Year:
2012
Publisher:
Elsevier
ISSN:
1366-5545
Keywords:
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 Record created 2013-07-26, last modified 2018-12-03

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