Facility Location and Distribution Planning in a Disrupted Supply Chain

Abstract

Most facility location models in the literature assume that facilities will never fail. In addition, models that focus on distribution planning assume that transportation routes are disruption-free. However, in reality, both the transportation routes and the facilities are subject to various sorts of disruptions. Further, not many supply chain models in the literature study perishable products. In this paper, we address issues of facility location and distribution planning in a supply chain network for perishable products under uncertain environments. We consider demand uncertainty along with random disruptions in the transportation routes and in the facilities. We formulate a mixed-integer optimisation model. Our model considers several capacitated manufacturers and several retailers with multiple transportation routes. We investigate optimal facility location and distribution strategies that minimise the total cost of the supply chain. We demonstrate the effectiveness of our model through an illustrative example and observe that a resilient supply chain needs to have a different design when compared to a disruption-free supply chain. The effects of various disruption uncertainties are also studied through statistical analysis.