In this study, the design of a three-level distribution system is considered in which a
single supplier ships a number of items to the retailers via a set of distribution
centers (DC) and stochastic demand is observed at the retailers. The problem is to
specify the number and location of the DCs, and the assignment of the retailers to
the DCs in such a way that total facility, transportation, safety stock, and joint
ordering and average inventory costs are minimized, and customer service
requirements are satisfied. Single source constraints are imposed on the assignment
of the retailers to the DCs. The integrated location/inventory model incorporates the
inventory management decisions into the strategic location/allocation decisions by
considering the benefits of risk pooling and the savings that result in the joint
replenishment of a group of items. We develop two heuristic methods to solve the
non-linear integer-programming model in an integrated way: (1) Improvement type
heuristic, (2) Constructive type heuristic. The heuristic algorithms are tested on a number of problem instances with 81 demand points (retailers) and 4 different types
of items. Both of the heuristics are able to generate solutions in very reasonable
times. The results are compared to the results of the p-median problem and found
that the total cost and the number of DCs can be lowered using our integrated model
instead of the p-median problem. Finally, sensitivity analysis is performed with
respect to the changes in inventory, transportation, and ordering cost parameters, and
variability of the demand.
| Identifer | oai:union.ndltd.org:METU/oai:etd.lib.metu.edu.tr:http://etd.lib.metu.edu.tr/upload/4/1093640/index.pdf |
| Date | 01 January 2003 |
| Creators | Balcik, Burcu |
| Contributors | Meral, Sedef |
| Publisher | METU |
| Source Sets | Middle East Technical Univ. |
| Language | English |
| Detected Language | English |
| Type | M.S. Thesis |
| Format | text/pdf |
| Rights | To liberate the content for public access |
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