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Designing the logistics network

Designing the logistics network. 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. Location Problems. Time Horizon: Single Period single facility

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Designing the logistics network

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  1. Designing the logistics network

  2. 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

  3. 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

  4. 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

  5. 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

  6. S.t. Ui<=Qi Sij>=0 Ui>=0

  7. What is cost? • Fi(Ui) is the operating cost. • Includes both fixed and variable cost

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