A hybrid optimization/simulation approach for a distribution network design of 3PLS

  • Authors:
  • Hyun Jeung Ko;Chang Seong Ko;Taioun Kim

  • Affiliations:
  • Policy and Market Analysis Division, Korea Maritime Institute, Seocho-gu, Seoul, Republic of Korea;Department of Industrial Engineering, Kyungsung University, Nam-Gu, Busan, Republic of Korea;Department of Industrial Engineering, Kyungsung University, Nam-Gu, Busan, Republic of Korea

  • Venue:
  • Computers and Industrial Engineering - Special issue: Sustainability and globalization: Selected papers from the 32 nd ICC&IE
  • Year:
  • 2006

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Abstract

Third party logistics service providers (3PLs) are playing an increasing role in the management of supply chains. Especially in warehousing and transportation services, a number of clients expect for 3PLs to improve lead times, fill rates, inventory levels, etc. Hence, these 3PLs are under pressure to meet various clients' service requirements in a dynamic and uncertain business environment. As a result, 3PLs should maintain an efficient distribution system of high performance competitive advantages. In this paper, we propose a hybrid optimization/simulation approach to design a distribution network for 3PLs in consideration of the performance of the warehouses. The optimization model uses a genetic algorithm to determine dynamic distribution network structures. Subsequently, the simulation model is applied to capture the uncertainty in clients' demands, order-picking time, and travel time for the capacity plans of the warehouses based on service time. The approach is applied to an example problem for examining its validity.