Distribution network design as a strategic decision has long-term effect on tactical and operational supply chain management. In this research, the location-allocation problem is studied under demand uncertainty. The purposes of this study were to specify the optimal number and location of distribution centers and to determine the allocation of customer demands to distribution centers. The main feature of this research is solving the model with unknown demand function which is suitable with the real-world problems. To consider the uncertainty, a set of possible scenarios for customer demands is created based on the Monte Carlo simulation. The coefficient of variation of costs is mentioned as a measure of risk and the most stable structure for firm's distribution network is defined based on the concept of robust optimization. The best structure is identified using genetic algorithms and 14% reduction in total supply chain costs is the outcome. Moreover, it imposes the least cost variation created by fluctuation in customer demands (such as epidemic diseases outbreak in some areas of the country) to the logistical system. It is noteworthy that this research is done in one of the largest pharmaceutical distribution firms in Iran.
This article integrates the company operations decisions (i.e. location, production, inventory, distribution, and transportation) and finance decisions (i.e. cash, accounts payable and receivable, debt, securities, payment delays, and discounts) in which the demands and return rate are uncertain, defined by a set of scenarios. The cash flow and budgeting model will be coupled with supply chain network design using a mixed integer linear programming formulation. The article evaluates two financial criteria, that is, the change in equity and the profit as objective functions. The results indicate that objective functions are partially interdependent, that is, they conflict in certain parts. This fact illustrates the inadequacy of treating process operations and finances in isolated environments and pursuing objective myopic performance indicators such as profit or cost. Due to the importance of the supply chain network design problem, a multi-objective robust optimization with the max-min version is extended to cope with the uncertainty. A solution approach integrating Benders' decomposition method with the scenario relaxation algorithm is also proposed in this research. The improved algorithm has been applied to solve a number of numerical experiments. All results illustrate significant improvement in computation time of the improved algorithm over existing approaches. For a problem, the proposed algorithm shows a significant reduction in computational time compared with the Benders' decomposition and scenario relaxation that shows the efficiency of the proposed solution method.
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