Abstract
This study develops an optimization model to integrate facility location and inventory control for a three-level distribution network consisting of a supplier, multiple distribution centers (DCs), and multiple retailers. The integrated model addressed in this study simultaneously determines three types of decisions: (1) facility location (optimal number, location, and size of DCs); (2) allocation (assignment of suppliers to located DCs and retailers to located DCs, and corresponding optimal transport mode choices); and (3) inventory control decisions on order quantities, reorder points, and amount of safety stock at each retailer and opened DC. A mixed-integer programming model is presented, which considers the carbon emission taxes, multiple transport modes, stochastic demand, and replenishment lead time. The goal is to minimize the total cost, which covers the fixed costs of logistics facilities, inventory, transportation, and CO2 emission tax charges. The aforementioned optimal model was solved using commercial software LINGO 11. A numerical example is provided to illustrate the applications of the proposed model. The findings show that carbon emission taxes can significantly affect the supply chain structure, inventory level, and carbon emission reduction levels. The delay rate directly affects the replenishment decision of a retailer.
Highlights
Literature ReviewSustainable supply chain management (SSCM) mainly involves three decisions, namely, operational (short-term), tactical (mediumterm), and strategic (long-term) decisions based on the time frame of decision making
Sustainable supply chain management (SSCM) has become a hot topic for researchers and practitioners who aim to integrate environmental and social aspects with economic considerations [1,2]
In relation to the inventory control decisions under multi-echelon distribution networks, previous studies mainly focused on replenishment time, order quantity, and safety stock at distribution centers (DCs) or retailers, or both
Summary
SSCM mainly involves three decisions, namely, operational (short-term), tactical (mediumterm), and strategic (long-term) decisions based on the time frame of decision making. In relation to the inventory control decisions under multi-echelon distribution networks, previous studies mainly focused on replenishment time, order quantity, and safety stock at DCs or retailers, or both. The corresponding parameters are the following: (1) e (carbon emission tax rate) = 30, (2) λ (delay rate) = 0.15, (3) LT (replenishment lead time at DCs) = 1, (4) 1 − δ (level of service) = 0.95, (5) W (upper bound of order quantity of retailers) = 25. This section studies the effect of carbon emission tax rate on distribution network design, inventory control decisions, and total cost invested. The reason may be that the available discrete size series of DCs have different costs; the best choice of the size is a result of the balance between the transportation and inventory costs
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