Title: Integrated location model with risk pooling and transportation mode selection

Authors: Abdulrahman R. Alenezi; Mohammed A. Darwish

Addresses: Department of Industrial and Management Systems Engineering, College of Engineering and Petroleum, Kuwait University, P.O. Box 5969, 13060, Safat, Kuwait ' Department of Industrial and Management Systems Engineering, College of Engineering and Petroleum, Kuwait University, P.O. Box 5969, 13060, Safat, Kuwait

Abstract: Location model with risk pooling and mode selection problems are integrated in this paper. Specifically, we consider a supply chain consisting of one supplier, distribution centres, transient points, and retailers who observe random demand that follows a certain probability distribution. Supplier dispatches the product to distribution centres using one mode of transportation while a given distribution centre may serve a retailer directly using one mode of transportation or through a transient point using two modes of transportation. The model is expected to determine facility location decisions, inventory decisions, and intermodal transportation decisions. The set of retailers who are assigned to a particular distribution centre are not known a priori. The derived model is large-scale and non-linear mixed integer programme. The difficulty of the model is reduced by adding a redundant constraint which made the solution procedure attainable. Also, Lagrangian relaxation approach is used to develop lower and upper limits on the optimal solution.

Keywords: supply chain management; SCM; location modelling; risk pooling; LMRP; transport mode selection; Lagrangian relaxation; transport modes; facility location; inventory decisions; intermodal transport; modelling.

DOI: 10.1504/IJISE.2014.058836

International Journal of Industrial and Systems Engineering, 2014 Vol.16 No.2, pp.200 - 222

Published online: 07 Jun 2014 *

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