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Melo, M. T., Cortinhal, M. J. & Lopes, M. J. (2018). Multi-echelon supply chain network design with transportation mode selection, product outsourcing and single-assignment requirements. OR 2018.

M. T. Melo et al.,  "Multi-echelon supply chain network design with transportation mode selection, product outsourcing and single-assignment requirements", in OR 2018, Bruxelas, 2018

@misc{melo2018_1732201449903,
	author = "Melo, M. T. and Cortinhal, M. J. and Lopes, M. J.",
	title = "Multi-echelon supply chain network design with transportation mode selection, product outsourcing and single-assignment requirements",
	year = "2018",
	howpublished = "Ambos (impresso e digital)",
	url = "https://www.euro-online.org/conf/admin/tmp/program-or2018.pdf"
}

TY  - CPAPER
TI  - Multi-echelon supply chain network design with transportation mode selection, product outsourcing and single-assignment requirements
T2  - OR 2018
AU  - Melo, M. T.
AU  - Cortinhal, M. J.
AU  - Lopes, M. J.
PY  - 2018
CY  - Bruxelas
UR  - https://www.euro-online.org/conf/admin/tmp/program-or2018.pdf
AB  - We address the problem of designing a supply chain network with four
layers comprising suppliers, plants, warehouses and customer zones.
Strategic decisions include the location of new plants and warehouses,
and the choice of their capacity levels from a finite set of available
options. Tactical decisions involve the selection of suppliers, the procurement
of raw materials, and planning the production and distribution
of end products to meet customer demands. Different transportation
modes are available for raw material and end product distribution.
Each mode is associated with a minimum shipment quantity, a maximum
transportation capacity and a variable cost. A further distinctive
feature of our problem is that each customer zone must be served
by a single facility (either a plant or a warehouse). Many companies
strongly prefer single-sourcing deliveries as they make the management
of the supply chain considerably simpler. Direct shipments from
a plant to a customer zone are only permitted if at least a given quantity
is distributed to the customer zone. Such a delivery scheme reduces
transportation costs for large quantities. In addition, each raw material
must be purchased from a single supplier by an operating plant. However,
different raw materials may be procured from multiple suppliers
by the same plant. This feature overcomes the disadvantages of singlesupplier
dependency. Furthermore, a strategic choice between in-house
manufacturing, product outsourcing and a combination of both is also
to be made. Outsourced products are consolidated at warehouses. Although
product outsourcing incurs higher costs than in-house manufacturing,
this option may be attractive when the cost of establishing a new
facility to process given end items is higher than the cost of purchasing
the products from an external source. We propose a mixed-integer
linear programming (MILP) formulation to identify the network configuration
with minimum total cost. We also develop a second MILP
formulation for the special situation in which all products delivered to
customers must be in-house manufactured but customer demands do
not have to be completely satisfied. In this case, a minimum customer
service level is guaranteed. Valid additional inequalities are developed
to enhance both formulations. A computational study is performed
to assess the impact of various problem characteristics on the ability
of state-of-the-art optimization software to solve problem instances
within a reasonable time limit. Using a set of randomly generated instances,
valuable insights are provided on the trade-offs achieved by
considering product outsourcing against a pure in-house manufacturing
strategy, and the extent to which it may not be economically attractive
to meet all demand requirements.

ER  -