Fuzzy Multi-objective Programming for Warehouse Selection

Maximizing profit or minimizing cost is the most widely used method for designing supply chain. This approach is based on production or company oriented logistics thinking. However, in the present competitive business environment, a more customer driven and holistic approach for supply chain management is required. In this paper, the focus is on warehouse network evaluation and design. The aim is to present a combination of customer oriented and cost/profit based approach for the evaluation and selection of alternative warehouses. For dealing with the imprecision and uncertainties in all stage of design and planning, we apply the fuzzy environment including fuzzy AHP method. By incorporating the f uzzy AHP in the process, the individual customers’ requirements and preferences for logistics service are analyzed and prioritized. Then, the alternative warehouses are evaluated based on customers’ point of view. The AHP-based analysis results in a customer-specific priority for each alternative warehouse. This priority describes how well a certain warehouse is expected to satisfy a certain customers’ performance requirements. The priorities are then entered to a ‘‘fuzzy Multi objective Integer Programming model” that incorporates the two important goals: cost-minimization and maximization of customer priorities with the realistic constraints such as meeting the customers’ demand, warehouse capacity, the number of warehouses required and budget allocated for each warehouse. In the proposed model, various input parameters have been treated as vague with a linear membership function of fuzzy type. An illustrative example is given to test the proposed model. The approach provides a decision tool that facilitates the warehouse selection and their quota allocation under different degrees of information vagueness in the decision parameters of a supply chain modeling.

Keywords:

Fuzzy AHP , Warehouse selection , Fuzzy programming