A multi-objective model for locating distribution centers in a supply chain network considering risk and inventory decisions

Abstract

This paper presents a multi-objective location problem in a three level supply chain network under uncertain environment considering inventory decisions. The proposed model of this paper considers uncertainty for different parameters including procurement, transportation costs, supply, demand and the capacity of various facilities. The proposed model presents a robust optimization model, which specifies locations of distribution centers to be opened, inventory control parameters (r, Q), and allocation of supply chain components, concurrently. The resulted mixed-integer nonlinear programming minimizes the expected total cost of such a supply chain network comprising location, procurement, transportation, holding, ordering, and shortage costs. The model also minimizes the variability of the total cost of relief chain and minimizes the financial risk or the probability of not meeting a certain budget. We use the ε-constraint method, which is a multi-objective technique with implicit trade-off information given, to solve the problem and using a couple of numerical instances, we examine the performance of the proposed approach.

Keywords

• Facility location
• Location-inventory
• Risk management
• Supply chain network design
• Multi-objective optimization