Facility location and distribution decisions in supply chains with fleet sizing considering both tangible and intangible criteria

Abstract

This paper addresses location and distribution decisions in supply chains where decisions for locating distribution centers (DCs) and determining the best strategy for shipping products from plants to customers through DCs are taken into consideration. The goal is to select locations of DCs to be opened and to design the network flow of products so that all customers’ demands are satisfied at minimum total cost of the distribution network, while total value of locating DCs and shipping products is maximized. Unlike most of the past research that ignores availability of different transporters with different capacities and costs at each node of the supply chain network, our study takes into account different transportation modes that are available at each potential DC location as well as at each plant, and determines the fleet size on each arc of the network. Furthermore, in addition to opening and operating costs of each potential DC, the decision maker (DM) also takes into account the value of each potential DC location which is calculated through a multiple criteria decision making (MCDM) method. We develop a two-phase approach to deal with this problem. In the first phase, the decision maker scores and ranks all potential DC locations with regard to a set of criteria, and in the second phase through a multi-objective mixed integer programming (MOMIP) model final location and distribution decisions, which incorporates selection of transportation modes and their associated loads, are made.