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

Didier Vila; Alain Martel; Robert Beauregard

doi:10.3934/jimo.2007.3.29

Article Contents

2007, Volume 3, Issue 1: 29-50. Doi: 10.3934/jimo.2007.3.29

This issue Previous Article Integrated supply chain design models: a survey and future research directions Next Article Logistics network design with supplier consolidation hubs and multiple shipment options

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

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

Received: July 31, 2005

Revised: March 31, 2006

Published: December 2006

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Abstract

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.

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Mathematics Subject Classification: Primary: 90B15.

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