Joint optimization of location and inventory decisions for improving supply chain cost performance

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Title: Joint optimization of location and inventory decisions for improving supply chain cost performance
Author: Keskin, Burcu Baris
Abstract: This dissertation is focused on investigating the integration of inventory and facility location decisions in different supply chain settings . Facility location and inventory decisions are interdependent due to the economies of scale that are inherent in transportation and replenishment costs . The facility location decisions have an impact on the transportation and replenishment costs which , in turn , affect the optimal inventory policy . On the other hand , the inventory policy dictates the frequency of shipments to replenish inventory which , in turn , affects the number of deliveries , and , hence , the transportation costs , between the facilities . Therefore , our main research objectives are to : ? compare the optimal facility location , determined by minimizing total transportation costs , to the one determined by the models that also consider the timing and quantity of inventory replenishments and corresponding costs , ? investigate the effect of facility location decisions on optimal inventory decisions , and ? measure the impact of integrated decision -making on overall supply chain cost performance . Placing a special emphasis on the explicit modeling of transportation costs , we develop several novel models in mixed integer linear and nonlinear optimization programming . Based on how the underlying facility location problem is modeled , these models fall into two main groups : 1 ) continuous facility location problems , and 2 ) discrete facility location problems . For the stylistic models , the focus is on the development of analytical solutions . For the more general models , the focus is on the development of efficient algorithms . Our results demonstrate ? the impact of explicit transportation costs on integrated decisions , ? the impact of different transportation cost functions on integrated decisions in the context of continuous facility location problems of interest , ? the value of integrated decision -making in different supply chain settings , and ? the performance of solution methods that jointly optimize facility location and inventory decisions .
URI: http : / /hdl .handle .net /1969 .1 /ETD -TAMU -2528
Date: 2009-05-15

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Joint optimization of location and inventory decisions for improving supply chain cost performance. Available electronically from http : / /hdl .handle .net /1969 .1 /ETD -TAMU -2528 .

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