Optimal Design of Multiechelon Supply Chain Networks with Generalized Production and Warehousing Nodes

This work proposes a mathematical modeling framework for the design of supply chain networks by providing flexibility on facilities’ location and operation. The proposed model addresses the design of a multiproduct and multiechelon network consisting of generalized production/warehousing nodes that can receive any material from any potential supplier or any other generalized production/warehousing node and deliver any material to any market or any other generalized production/warehousing node. The model is formulated as a mixed integer linear programming problem that aims to find the optimal structure of the network in order to satisfy market demand with the minimum overall capital and operational cost. The applicability of the proposed generalized supply chain network design model is illustrated by using a real case study from a European consumer goods company whereas its robustness and value are documented through sensitivity analysis and through a comparison with a counterpart model that utilizes the mainstream fixed echelon network structure