A three-level supply chain network design model with risk-pooling and lead times

Sukun Park, Tae-Eog Lee and Chang Sup Sung

Transportation Research Part E: Logistics and Transportation Review, 2010, vol. 46, issue 5, 563-581

Abstract: This paper considers a single-sourcing network design problem for a three-level supply chain consisting of suppliers, distribution centers (DC's) and retailers, where risk-pooling strategy and DC-to-supplier dependent lead times are considered. The objective is to determine the number and locations of suppliers and DC's, the assignment of each location-fixed DC to a supplier and that of each retailer to a DC, which minimizes the system-wide location, transportation, and inventory costs. The problem is formulated as a nonlinear integer programming model, for which a two-phase heuristic solution algorithm is derived based on the Lagrangian relaxation approach. Numerical experiments show that the proposed heuristic is effective and also efficient.

Keywords: Location-inventory; model; Risk-pooling; Lead; time; Lagrangian; relaxation; Supply; chain; management (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (36)

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