An Integrated Location-Inventory Model for Supply Chain Network with Correlated Demand

Existence of uncertainties and some constraints such as capacity and correlation between demand causing complexity of the supply chain network design. This paper considers a three level location-inventory problem where demand across the retailers is assumed to be correlated. The purpose of the model is to minimize total inventory system and facility location cost simultaneously. Innovation of this study is considering existence of different vehicles, multi-product and different capacity of potential warehouses. To ensure the accuracy and validity of the model, a numerical example has been solved by GAMS and two Meta heuristic algorithm of GA and hybrid of GA and SA with local search. ANOVA test have showed sufficient efficiency of Meta heuristic algorithms. We did sensitivity analysis for some important parameters such as transportation cost, holding cost and demand of retailers. Sensitivity analysis showed total cost of inventory system and facility location have high sensitives too mode of transportation. While we increase transportation cost, the total cost will increase exponentially.

Keywords:

Supply chain , Location-Inventory Problem , Demand Correlation , Meta-heuristic , ANOVA