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An integrated production-distribution model for the dynamic location and allocation problem with safety stock optimization

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  • Gebennini, Elisa
  • Gamberini, Rita
  • Manzini, Riccardo

Abstract

The design and management of a multi-stage production-distribution system is one of the most critical problems in logistics and in facility management. Companies need to be able to evaluate and design different configurations for their logistic networks as quickly as possible. This means coordinating the entire supply chain effectively in order to minimize costs and simultaneously optimize facilities location, the allocation of customer demand to production/distribution centers, the inbound and outbound transportation activities, the product flows between production and/or warehousing facilities, the reverse logistics activities, etc. Full optimization of supply chain is achieved by integrating strategic, tactical, and operational decision-making in terms of the design, management, and control of activities. The cost-based and mixed-integer programming model presented in this study has been developed to support management in making the following decisions: the number of facilities (e.g. warehousing systems, distribution centers), the choice of their locations and the assignment of customer demand to them, and also incorporate tactical decisions regarding inventory control, production rates, and service-level determination in a stochastic environment. This paper presents an original model for the dynamic location-allocation problem with control of customer service level and safety stock optimization. An experimental analysis identifies the most critical factors affecting the logistics cost, and to finish, an industrial application is illustrated demonstrating the effectiveness of the proposed optimization approach.

Suggested Citation

  • Gebennini, Elisa & Gamberini, Rita & Manzini, Riccardo, 2009. "An integrated production-distribution model for the dynamic location and allocation problem with safety stock optimization," International Journal of Production Economics, Elsevier, vol. 122(1), pages 286-304, November.
    • Handle: RePEc:eee:proeco:v:122:y:2009:i:1:p:286-304
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    Cited by:

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    3. Correia, Isabel & Melo, Teresa, 2016. "A computational comparison of formulations for a multi-period facility location problem with modular capacity adjustments and flexible demand fulfillment," Technical Reports on Logistics of the Saarland Business School 11, Saarland University of Applied Sciences (htw saar), Saarland Business School.
    4. M. H. Alavidoost & Mosahar Tarimoradi & M. H. Fazel Zarandi, 2018. "Bi-objective mixed-integer nonlinear programming for multi-commodity tri-echelon supply chain networks," Journal of Intelligent Manufacturing, Springer, vol. 29(4), pages 809-826, April.
    5. Manzini, Riccardo, 2012. "A top-down approach and a decision support system for the design and management of logistic networks," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(6), pages 1185-1204.
    6. de Keizer, Marlies & Akkerman, Renzo & Grunow, Martin & Bloemhof, Jacqueline M. & Haijema, Rene & van der Vorst, Jack G.A.J., 2017. "Logistics network design for perishable products with heterogeneous quality decay," European Journal of Operational Research, Elsevier, vol. 262(2), pages 535-549.
    7. Eskandarpour, Majid & Zegordi, Seyed Hessameddin & Nikbakhsh, Ehsan, 2013. "A parallel variable neighborhood search for the multi-objective sustainable post-sales network design problem," International Journal of Production Economics, Elsevier, vol. 145(1), pages 117-131.
    8. Mosahar Tarimoradi & M. H. Fazel Zarandi & Hosain Zaman & I. B. Turksan, 2017. "Evolutionary fuzzy intelligent system for multi-objective supply chain network designs: an agent-based optimization state of the art," Journal of Intelligent Manufacturing, Springer, vol. 28(7), pages 1551-1579, October.
    9. Shu, Jia & Li, Zhengyi & Shen, Houcai & Wu, Ting & Zhong, Weijun, 2012. "A logistics network design model with vendor managed inventory," International Journal of Production Economics, Elsevier, vol. 135(2), pages 754-761.
    10. Guerrero, W.J. & Prodhon, C. & Velasco, N. & Amaya, C.A., 2013. "Hybrid heuristic for the inventory location-routing problem with deterministic demand," International Journal of Production Economics, Elsevier, vol. 146(1), pages 359-370.
    11. Jahani, Hamed & Abbasi, Babak & Sheu, Jiuh-Biing & Klibi, Walid, 2024. "Supply chain network design with financial considerations: A comprehensive review," European Journal of Operational Research, Elsevier, vol. 312(3), pages 799-839.
    12. Fahmy, Sherif A. & Zaki, Areej M. & Gaber, Yomna H., 2023. "Optimal locations and flow allocations for aggregation hubs in supply chain networks of perishable products," Socio-Economic Planning Sciences, Elsevier, vol. 86(C).
    13. Linda Zhang & Carman Lee & Shuzhu Zhang, 2016. "An integrated model for strategic supply chain design: Formulation and ABC-based solution approach," Post-Print hal-01744868, HAL.
    14. Brahimi, Nadjib & Absi, Nabil & Dauzère-Pérès, Stéphane & Nordli, Atle, 2017. "Single-item dynamic lot-sizing problems: An updated survey," European Journal of Operational Research, Elsevier, vol. 263(3), pages 838-863.
    15. Correia, Isabel & Melo, Teresa, 2016. "Multi-period capacitated facility location under delayed demand satisfaction," European Journal of Operational Research, Elsevier, vol. 255(3), pages 729-746.
    16. Mirzapour Al-e-hashem, S.M.J. & Malekly, H. & Aryanezhad, M.B., 2011. "A multi-objective robust optimization model for multi-product multi-site aggregate production planning in a supply chain under uncertainty," International Journal of Production Economics, Elsevier, vol. 134(1), pages 28-42, November.
    17. Wang, Gang & Lei, Lei, 2012. "Polynomial-time solvable cases of the capacitated multi-echelon shipping network scheduling problem with delivery deadlines," International Journal of Production Economics, Elsevier, vol. 137(2), pages 263-271.
    18. Gebennini, Elisa & Grassi, Andrea & Rimini, Bianca & Depietri, Eleonora, 2013. "Costs and opportunities of moving picking activities upstream in distribution networks: A case study from the beverage industry," International Journal of Production Economics, Elsevier, vol. 143(2), pages 342-348.
    19. Das, Kanchan, 2011. "Integrating effective flexibility measures into a strategic supply chain planning model," European Journal of Operational Research, Elsevier, vol. 211(1), pages 170-183, May.

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