A Distribution Network Design model for deteriorating item
by Kai Tang, Chao Yang
International Journal of Logistics Systems and Management (IJLSM), Vol. 4, No. 3, 2008

Abstract: In this paper, we study the Distribution Network Design problem integrating production, inventory and facilities location, involving a single supplier, some potential Distribution Centres (DCs) and multiple retailers. Distinct from traditional inventory location problems, the product in consideration is deteriorating item of which the deterioration, production and demand rates are all constant. Thus, the problem is to determine how many DCs to be set up, where to locate them, how to serve the retailers using these DCs, as well as the optimal production and inventory policies for the whole distribution network. The goal is to minimise the total deterioration, production, inventory, transportation and facilities location cost. We formulate this problem as a set partitioning mix-integer programming model. This model is a non-deterministic polynomial time-hard problem, so a meta-heuristic solution approach is introduced based on Genetic Algorithms (GA). Numerical examples are given to illustrate the application of the algorithm, and show that GA is an efficient solution approach for this problem.

Online publication date: Wed, 12-Mar-2008

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