Title: Determining an optimal warehouse location, capacity, and product allocation in a multi-product, multi-period distribution network: a case study

Authors: Chau Thi Diem Le; Jirachai Buddhakulsomsiri; Chawalit Jeenanunta; Aussadavut Dumrongsiri

Addresses: Department of Industrial Systems Engineering, Ho Chi Minh City University of Technology, Ho Chi Minh City, 700000, Vietnam ' School of Manufacturing Systems and Mechanical Engineering, Sirindhorn International Institute of Technology, Thammasat University, Pathum Thani, 12121, Thailand ' School of Manufacturing Systems and Mechanical Engineering, School of Management Technology, Sirindhorn International Institute of Technology, Thammasat University, Pathum Thani, 12000, Thailand ' School of Manufacturing Systems and Mechanical Engineering, School of Management Technology, Sirindhorn International Institute of Technology, Thammasat University, Pathum Thani, 12000, Thailand

Abstract: This paper addresses the distribution network design problem in a complex four-echelon supply chain system that includes factories, internal warehouses, external warehouses and customers. The distribution network contains a large number of products and considers 20 periods of planning horizon. Product deliveries are made using two shipment methods, direct shipment from internal warehouse and through shared external warehouse, to two groups of customers, domestic and overseas, with deterministic demands. The objective is to determine an optimal location of a new external warehouse, its capacity, and product-facility-market allocation so as to minimise the total logistics cost, including transportation and warehousing costs. A real-world large-scale problem from industry is solved optimally using a mixed integer linear programming model. A sensitivity analysis on three key parameters, product demand, unit transportation cost, and unit warehousing cost, is conducted to find the final solution.

Keywords: facility location; capacity; product allocation; distribution network; four-echelon supply chain; multiple products; multiple periods; multi-modal; multiple storage types; case study.

DOI: 10.1504/IJLSM.2019.103517

International Journal of Logistics Systems and Management, 2019 Vol.34 No.4, pp.510 - 532

Received: 23 Sep 2017
Accepted: 12 May 2018

Published online: 04 Nov 2019 *

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