An integrated approach in designing a cost-effective inbound supply network

An integrated approach to designing a cost-effective inbound supply network on a tactical planning level has received little attention in the literature, even though it would have significant practical applications. Practitioners often model and design supply networks by addressing the different logistics functions independently, that is, without considering the existing interactions between these functions. This work presents an alternate approach for modeling and analyzing an inbound supply network. The problem is defined as developing a methodology that integrates the different logistics functions by formulating and solving dependent decision problems with respect to capacity and time constraints so that a cost-effective supply network can be generated.; The interactions of the involved decision variables result in a complex problem. Therefore, an integration methodology has been developed that divides the problem into several sub-problems that are formulated and structured so that the interactions are modeled in the solutions. These sub-problems include lot-sizing, equipment assignment, facility planning, fleet sizing, transportation, and container handling. The solutions encompass heuristics and analytical solution procedures, including two optimization procedures--the internal delivery schedule problem (IDSP) and the truck trailer ratio problem (TTR)--and two queueing models. The two optimization procedures represent a major contribution of this work: No existing literature addressing these problems could be found.; The supply network is modeled from the supplier to the point of use. This model is constructed by means of a flexible, interactive methodology that incorporates the solution procedures for each of the sub-problems and the input of a decision maker. The IDSP and TTR produce optimal solutions that are integrated into the model. The network is evaluated by utilizing a total logistics cost approach that incorporates the different cost functions of the inbound supply network. It generates cost-effective supply networks for in-time-and-sequence parts. Since this solution is fully integrated, this global network results in lower costs than can be obtained analyzing the problems separately. Additionally, the methodology can perform "what-if" analyses and calculate the corresponding effects on feasibility and costs. The developed methodology is used for a real-world problem defined by an automotive assembly plant to demonstrate its applicability.