Study on a Distribution Network Design under Supply Chain

This paper addresses the distribution network design problem under a supply chain system that involves selecting the optimum numbers, locations and capacities of plants and warehouses to open so that all customer demand is satisfied at minimum total costs of the distribution network. We develop a mixed integer programming allowing for multiple levels of capacities available to the warehouses and plants. The paper also provide an efficient heuristic solution procedure for this supply chain system problem, and presents a computational study to investigate the value of coordinating production and distribution planning.