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.
Keywords: Location-inventory model ; Facility location ; Inventory management ; Three-level supply chain ; Reverse logistics ; Network Design-Model ; Safety Stock Considerations ; Distribution-System-Design ; Single-Sourcing Problem ; Distribution Centers ; Warehouse Location ; Facility Location ; Lead Time ; Algorithm ; Reverse
Record created on 2013-07-26, modified on 2016-08-09