Integrated supply chain and competitive facility location models
Citation
Bilir, C., & Önsel Ekici, Ş. (2016). Integrated supply chain and competitive facility location models. In XIV. International Logistics and Supply Chain Congress (LM-SCM 2016) (pp. 109-119). İzmir: Ege University Faculty of Economics and Administrative SciencesAbstract
The optimization of supply chain networks plays a key role in determining the competitiveness of the
whole supply chain. Therefore, during the last two decades, an increasing number of studies have focused on the
optimization of the overall supply chain network. However, in most of these optimization studies, the structure of
the network is considerably simplified and there is still a need for more comprehensive models that simultaneously
capture many aspects that are relevant to real-world problems such as demand dynamics on the market. Facility
location decisions—more specifically, decisions on the physical network structure of a supply chain network—
are important factors affecting chain’s competitiveness, especially for the supply chains serving retail markets.
However, supply chain network optimization models in the current literature ignore the impacts of network
decisions on customer demand. Nevertheless, competitive facility location problems model only the distribution
part of the supply chain, even though they have certain characteristics of supply chain networks and analyze the
rival chains existing on the market. In this study, an integrated supply chain network optimization model based
on the joint supply chain network optimization and competitive facility location models is proposed to analyze the
results of ignoring the impacts of network decisions on customer demand. The unique unknown variable within
the model is the demand. The demand at each customer zone is assumed to be determined by price and the utility
function. The utility function is defined as the availability of same-day transportation from the distribution center
to the customer zone.