A Supply Chain Product Delivery and Distribution Planning Model

Abstract

We propose a mixed integer program (MIP) based product distribution planning model for optimizing the transportation and distribution cost of a supply chain. The model takes into account production/procurement centers (PCs) and plans product delivery to customers either directly from the PCs, or through distribution centers (DCs) considering the available distribution modes. To cover the customer requirements at diverse geographic regions, the model selects optimum regions for DCs, and determines the capacities and the number of DCs to be used in each region to achieve optimum cost. Within the possible distribution modes, the model explores options of using distribution contractors (e.g., the U.S. post office; FedEx, UPS, etc.). A numerical example illustrates the applicability of the model.