A location-inventory model for large three-level supply chains

Jean-Sébastien Tancrez, Jean-Charles Lange and Pierre Semal

Transportation Research Part E: Logistics and Transportation Review, 2012, vol. 48, issue 2, 485-502

Abstract: 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 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (22)

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DOI: 10.1016/j.tre.2011.10.005

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