Joint Facility Location and Supplier Selection Decisions of Distribution Networks with Random Supply Lead Time

摘要

Supplier selection and facility location problems are often considered separately. In this study, we integrate decisions that are usually made in three stages: the location of Distribution Centers (DCs), the allocation of suppliers to DCs, and the assignment of retailers to the located DCs. More specifically, the distribution network under consideration is composed of a set of potential suppliers serving a set of retailers through a set of DCs to locate. We assume that each retailer faces a random demand of a single product type, and the supply lead-time from each supplier to each DC is random. Economic Order Quantity policy is used by each DC to control its inventory, and a safety stock is kept to ensure a given retailer service level. The goal is to minimize total inventory and safety stock costs at the DCs, ordering and transportation costs across the network, and fixed DCs location costs. The resulting problem is a difficult non-linear combinatorial optimization problem. A Lagrangian relaxation approach is proposed to generate efficient solutions.