Taking market forces into account in the design of production-distribution networks: A positioning by anticipation approach

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January 2007, 3(1): 29-50. doi: 10.3934/jimo.2007.3.29

Taking market forces into account in the design of production-distribution networks: A positioning by anticipation approach

Didier Vila ^1, , Alain Martel ^2, and Robert Beauregard ^2,

1.	Universiét Laval, FOR@C Research Consortium, Network Organization Technology Research Center (CENTOR), Sainte-Foy, Québec, G1K7P4, Canada
2.	Université Laval, FOR@C Research Consortium, Network Organization Technology Research Center (CENTOR), Sainte-Foy, Québec, G1K7P4, Canada, Canada

Received August 2005 Revised April 2006 Published January 2007

Abstract
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This paper presents an approach to take into account market opportunities when designing production-distribution networks. Three types of sub-markets found in several industrial contexts are analyzed: spot markets, contracts and Vendor Managed Inventory (VMI) agreements. For contracts and VMI agreements, customer preferences with respect to different logistics policies are considered. A price-supply function is proposed to model the spot market behavior. The production-distribution network design problem is formulated as a two-stage stochastic program with fixed recourse. Finally, a sample average approximation method (SAA), based on Monte Carlo sampling techniques, is used to solve the model.

Keywords: Mathematical Programming, Market Analysis, Monte-Carlo Sampling Methods, Production-distribution Network Design, Logistics Policy Selection..

Mathematics Subject Classification: Primary: 90B1.

Citation: Didier Vila, Alain Martel, Robert Beauregard. Taking market forces into account in the design of production-distribution networks: A positioning by anticipation approach. Journal of Industrial & Management Optimization, 2007, 3 (1) : 29-50. doi: 10.3934/jimo.2007.3.29

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