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Designing the logistics network
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Facility location decisions
• Criteria– Demand and locations of the demand– Distribution systems (Rail, ground, air, sea)– Material sources– Energy sources and cost– Labor: qualifications and cost
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Location Problems• Time Horizon:
– Single Period single facility– Multi-period, periodic modifications on the location
• Facility Typology:– Single kind (RDC or CDC)– Multi kind (RDC and CDC)
• Material Flow:– Single commodity– Multi commodity
• Interactions among facilities• Dominant material flow:
– Inbound material movement is more important– Outbound material movement is more important– Both inbound and outbound material movements are important
• Demand divisibility– Demand can be acquired from multiple source or single source
• Influence of transportation on location determination
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Modeling and solving location problems
• Single-echelon single-commodity location models– Facilities to be located are homogeneous– Material flow in and out are negligible– All material flows are homogenous. They are
treated a single commodity– Transportation cost is linearly correlated with the
amount and concave– Facility operating cost is linear and concave
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Mathematical model definition
• Dj: Demand by customer j• Qi: Capacity of a potential facility i• Ui: Operations in a facility• Sij: amount of product sent from i to j.• Cij(Sij): Cost of shipping Sij unit product• Fi(Ui): Operation cost at facility i
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S.t.
Ui<=QiSij>=0Ui>=0
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What is cost?
• Fi(Ui) is the operating cost. – Includes both fixed and variable cost