Supply chain design: A holistic approach

Local considerations are one of the major pitfalls in designing, operating and managing systems. As such are the “Supply Chain design decisions”, hence we have tried to incorporate systems thinking approach, and in particular the “Theory of Constraints”, into the problem of “Locating a new Distribution Center” among a producer and a set of existing retailers. While customers face known random demand, we look for the least cost location candidate in a plane with direct shipping. Usefulness of an equity function to balance the inventory levels at retail shops is also discussed. The model is finally reduced to a single nonlinear objective and for a hypothetical numerical example it is solved by Particle Swarm Optimization method.