Hierarchical facility network planning model for global logistics network configurations

Abstract

This paper presents a novel hierarchical network planning model for global logistics (GLs) network configurations. The proposed method, which is based on the fundamentals of integer programming and hierarchical cluster analysis methods, determines the corresponding locations, number and scope of service areas and facilities in the proposed GLs network. Therein, a multi-objective planning model is formulated that systematically minimizes network configuration cost and maximizes both operational profit and the customer satisfaction rate. Particularly, potential risk-oriented costs, such as macro-environmental-risk and micro-operational-risk costs are considered in the proposed model. Numerical results indicate that the overall system performance can be improved by up to 11.52% using the proposed approach.