Warehouse location problem in supply chain designing: a simulation analysis

Abstract

The facility location problem is a popular issue in the literature. The current development of world economies and globalization of the market requires continuous improvement of methods and research in this field. The location of the object determines the time of transport, affects the operational costs of the supply chain, and determines the possible amount of inventory or minimum inventory levels. These are critical issues from the point of view of designing an effective logistics system. The degree of complexity of current decision-making problems requires the construction of mathematical models and support for the decision-maker by optimization and simulation methods. A comprehensive and systemic approach to the problem allows the effective planning of supply chains. The purpose of this article was to study the sensitivity of the warehouse location problem in the supply chain. The solution was obtained based on the methodology developed under the SIMMAG3D project. The article presents the characteristics of the issue of the location of warehouse objects, the mathematical formulation of the solved problem of location and the method of its solution based on the heuristic algorithm using the modification of the Busacker-Gowen method. Then, a supply chain simulation model was developed in the FLEXSIM environment and scenario studies were performed for various input data and model parameters. The analysis and assessment of the solution based on parameters such as utilization of the potential of warehouse objects object were presented. Random change in demand described by Erlang distribution and normal distribution was considered. The analysis showed how the selection of a statistical distribution to describe the input data can affect the shape of the logistics system. The article ends with a summary of considerations and a plan for further research in the use of the simulation environment to support the decision-making process of the location of storage facilities and the functioning of supply chains.

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