Integrated Production, Inventory, and Location-Allocation Decisions in Designing Supply Chain Networks

Abstract

This paper studies the design and development of an inventory model for manufacturers with constant production rates considering location and allocation decisions in a three-level supply chain. In this supply chain, the demands of customers and the lead times are assumed to be uncertain. Therefore, each distribution center retains some amount of safety stock to provide suitable service level for customers. The proposed non-linear model aims to minimize location and inventory costs of distribution centers, manufacturers and transportation costs subject to relevant constraints. To solve the model, an efficient imperialist competitive algorithm and a Tabu search algorithm, each using variable neighborhood search, are proposed. The model outputs are decisions such as which distribution centers and manufacturers are opened, the allocation of customers to distribution centers, and distribution centers to manufacturers. Results are also the ordering quantity of each opened distribution center and the production rate of each opened manufacturer. The computational results for several instances of the problem are represented to show the efficiency of proposed algorithm.