Study On Facility Strategies In Logistics System Of Agile Supply Chain

In today's competitive market, structure of the logistics system is important to competition. As parts of the structure, facility strategy (FS) is in the first place. Usually, the structure is to meet service goals at the lowest possible cost. To achieve this, an ideal FS must have the optimum number and location of RDCs.When solving such problem, one must consider all relevant costs and service level constraints. But complex trade-offs between costs and service-level make it difficult to analyze. From the view of number of RDCs, on the one hand, it is good to have many RDCs since this reduces the cost of transporting products to retailers and will provide better service; on the other hand, it is good to have few RDCs since this reduces the cost of holding and safety stock inventory via risk-pooling effects, and reduces the fixed costs associated with operating RDCs via economies of scale. Consequently, efficient FS that reduce total cost must take into account the interactions of the various activities in the distribution chain.Motivated by these issues, we propose in this paper an integrated model for agile supply chain. The model incorporates fixed costs of locating RDCs, working inventory and safety stock inventory costs at RDCs and transport costs from the suppliers to the RDCs. The model is formulated as a non-linear integer-programming problem. It's a NP-Hard problem, and it's hard to be resolved. An algorithm mixed heuristics and Lagrangian relaxation solution is proposed. To support the algorithm, an in-house software tool is exploited. Finally, we test the algorithm by the software on a problem with 6 retailers. Compared with result and calculational time of exhaustion approach, we found it reliable, effective and rapidly.