A model for designing multiple products logistics networks

Abstract

PurposeThis study aims to provide a model for designing logistics networks with multiple products. In such a design model, it is important to determine the operation‐related parameters accurately.Design/methodology/approachAn iterative process is used to design a logistics network. First, a mixed integer‐programming (MIP) model is used to determine the configuration of the network. Then, based on the output of MIP model, an inventory‐planning model for multiple products is developed to decide the lot size and ordering frequency for each product at each node of the logistics network, and a vehicle routing model is used to find the shortest product delivery routes from wholesalers to retailers. After that, the operation‐related parameters are recalculated and updated, and the configuration of the logistics network is re‐optimized. Such process proceeds until it converges. By this iterative process, the operation‐related parameters can be determined more accurately.FindingsThe iterative process proposed in the paper possesses following advantages: determining operation‐related parameters accurately, and adapting to changing market quickly.Research limitations/implicationsA typical logistics network used to distribute multiple products is considered as target system to apply this model. This paper does not handle a real case study as an application example.Originality/valueThis paper proposes a modular design approach: different types of mathematics are used for different modules. The model developed in this paper is realizable as software tool in logistics management.