Dynamic multi-commodity capacitated facility location: a mathematical modeling framework for strategic supply chain planning

In this paper, we focus on the strategic design of supply chain networks. We propose a mathematical modeling framework that captures many practical aspects of network design problems simultaneously but which have not received adequate attention in the literature. The aspects considered include: dynamic planning horizon, generic supply chain network structure, external supply of materials, inventory opportunities for goods, distribution of commodities, facility configuration, availability of capital for investments, and storage limitations. Moreover, network configuration decisions concerning the gradual relocation of facilities over the planning horizon are considered. To cope with fluctuating demands, capacity expansion and reduction scenarios are also analyzed as well as modular capacity shifts. The relation of the proposed modeling framework with existing models is discussed. For problems of reasonable size, we report on our computational experience with standard mathematical programming software. In particular, useful insights on the impact of various factors on network design decisions are provided. (c) 2004 Elsevier Ltd. All rights reserved.