Modeling the designs in terms of logistics service center placement: a case study

Abstract

Suggesting the proper location for logistics facility can be considered as a decision making problem, wherein the final solution/decision is affected by multiple external or even internal circumstances. In order to address the decision making issues, various multi-criteria decision making (MCDM) techniques may be implemented; and hence, they can be applied even when making a decision about an adequate logistics service center (LSC) placement in an examined territory (i.e., national logistics network of the selected territory), which is an aim of this manuscript. Following the statements above, as for the individual instruments of MCDM to be implemented in terms of the crucial objective of this research, the definite decision making process will be carried out by applying the Analytic Hierarchy Process (AHP) followed by the Technique for Order Preference by Similarity to the Ideal Solution (TOPSIS), on the basis of criteria weights defined by the Saaty pairwise comparison method. The methods used appear to be ideal instruments towards decision making on the most suitable location which is represented by the region in our case. Subsequently, these will be ordered from the most preferred to least one by using a preference ranking. As a result of the application of AHP and TOPSIS approaches, based on the conducted calculations in regard to decision making on identifying the proper LSC location out of eight selected regions, one specific region will be defined as the most suitable (so-called compromise) scenario. Individual tools allow for reducing the number of assigned criteria that are taken into account in searching process for individual solutions. In order to objectify the entire decision making procedure, ten topic-involved experts having practical experience with a subject of logistics object allocation will be asked to participate in the process. Preferences differ from one decision maker (expert) to another; hence, the outcome depends on who is making decisions and what their goals and preferences are.

Keywords

• multi-criteria decision making
• logistics service center
• facility location
• AHP
• TOPSIS