Multi-layer dynamic facility location-allocation in supply chain network design with inventory, and CODP positioning decisions

The efficient design of the supply chain network is crucial for good performance and robust functionality. In this paper, the facility location-allocation problem in the strategic stage of the supply chain planning is addressed. The facility location decision is studied for a 4-layer supply chain, with location decision in 2 layers (plants and distribution centers). The study incorporates tactical decisions along with the facility location decision. These include planning inventory levels, flow of products, and position of the customer order decoupling points. The decisions are studied on a multi-period (dynamic) planning horizon, and the problem is formulated as a mixed-integer linear programming model with profit maximization objective. The model is tested on a number of generated instances for the problem, and the optimum solutions are obtained and discussed.