A hierarchical optimization technique for the strategic design of distribution networks

  • Authors:

  • Nicola Costantino;Mariagrazia Dotoli;Marco Falagario;Maria Pia Fanti;Agostino Marcello Mangini;Fabio Sciancalepore;Walter Ukovich

  • Affiliations:

  • Dept. of Mechanical and Management Engineering, Polytechnic of Bari, Italy;Dept. of Electrical and Electronics Engineering, Polytechnic of Bari, Italy;Dept. of Mechanical and Management Engineering, Polytechnic of Bari, Italy;Dept. of Electrical and Electronics Engineering, Polytechnic of Bari, Italy;Dept. of Electrical and Electronics Engineering, Polytechnic of Bari, Italy;Dept. of Mechanical and Management Engineering, Polytechnic of Bari, Italy;Dept. of Industrial Engineering and Information Technology, University of Trieste, Italy

  • Venue:
  • Computers and Industrial Engineering
  • Year:
  • 2013

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Abstract

The paper addresses the optimal design of the last supply chain branch, i.e., the Distribution Network (DN), starting from manufacturers till the retailers. It considers a distributed system composed of different stages connected by material links labeled with suitable performance indices. A hierarchical procedure employing direct graph (digraph) modeling, mixed integer linear programming, and the Analytic Hierarchy Process (AHP) is presented to select the optimal DN configuration. More in detail, a first-level DN optimization problem taking into account the definition and evaluation of the distribution chain performance provides a set of Pareto optimal solutions defined by digraph modeling. A second level DN optimization using the AHP method selects, on the basis of further criteria, the DN configuration from the Pareto face alternatives. To show the method effectiveness, the optimization model is applied to a case study describing an Italian regional healthcare drug DN. The problem solution by the proposed design method allows improving the DN flexibility and performance.