Advanced Search
MyIDEAS: Login

A Simultaneous Inventory Control and Facility Location Model with Stochastic Capacity Constraints

Contents:

Author Info

  • Pablo Miranda

    ()

  • Rodrigo Garrido

    ()

Registered author(s):

    Abstract

    Traditionally, logistics analysts divide decisions levels into strategic, tactical and operational. Often these levels are considered separately for modeling purposes. The latter may conduce to make non-optimal decisions, since in reality there is interaction between the different levels. In this research, a cross-level model is derived to analyze decisions about inventory control and facility location, specially suited to urban settings, where the storage space is scarce and the vehicles’ capacity is usually restricted. Both conditions, on the one hand make the problem difficult to solve optimally but on the other hand make it more realistic and useful in practice. This paper presents a simultaneous nonlinear-mixed-integer model of inventory control and facility location decisions, which considers two novel capacity constraints. The first constraint states a maximum lot size for the incoming orders to each warehouse, and the second constraint is a stochastic bound to inventory capacity. This model is NP-Hard and presents nonlinear terms in the objective function and a nonlinear constraint. A heuristic solution approach is introduced, based on Lagrangian relaxation and the subgradient method. Numerical experiments were designed and applied. The solution procedure presented good performance in terms of the objective function. One of the key conclusions of the proposed modeling approach is the fact that a reduction of the inventory capacity does not necessarily imply an increase in the number of installed warehouses. In fact, reducing the order size allows the optimal allocation of customers (those with higher variances) into different warehouses, reducing the total system’s cost. Copyright Springer Science + Business Media, LLC 2006

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://hdl.handle.net/10.1007/s11067-006-7684-5
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Springer in its journal Networks and Spatial Economics.

    Volume (Year): 6 (2006)
    Issue (Month): 1 (March)
    Pages: 39-53

    as in new window
    Handle: RePEc:kap:netspa:v:6:y:2006:i:1:p:39-53

    Contact details of provider:
    Web page: http://www.springerlink.com/link.asp?id=106607

    Related research

    Keywords: Inventory; Facilities location; Chance constrained programming; Lagrangian relaxation;

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:kap:netspa:v:6:y:2006:i:1:p:39-53. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F. Baum).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.