Network design for cylinder gas distribution
Abstract: Network design of
the supply chain is an important and strategic aspect of logistics management.
In this paper, we address the network design problem specific to packaged gases
(cylinder) supply chain. We propose an integrated framework that allows for the
determination of the optimal facility locations, the filling plant production
capacities, the inventory at plants and hubs, and the number of packages to be
routed in primary and secondary transportation.
Design/methodology/approach: We formulate the problem as a mixed integer
program and then develop a decomposition approach to solve it. We illustrate
the proposed framework with numerical examples from real-life packaged gases
supply chain. The results show that the decomposition approach is effective in
solving a broad range of problem sizes.
Findings: The main finding of this paper is that decomposing the network
design problem into two sub-problems is very effective to tackle the real-life
large scale network design problems occurring in cylinder gas distribution by
optimizing strategic and tactical decisions and approximating the operational
decisions. We also benchmark the results from the decomposition approach by
solving the complete packaged gases network design model for smaller test cases.
Originality/value: The main contribution of our work is that it
integrates supply chain network design decisions without fixing the fillings
plant locations with inventory and resource allocation decisions required at
the plants. We also consider the transportation costs for the entire supply
chain including the transhipment costs among different facilities by deciding
the replenishment frequency.
Keywords: Network Design,
Optimization, Location-Routing, Packaged Gases, Inventory Management,
Decomposition Approach, Heuristics, Mixed Integer Linear Programming Model
Author: Tejinder Pal Singh,
Nicoleta Neagu, Michele Quattrone, Philippe Briet
Journal Code: jptindustrigg150015
