IDEAS home Printed from https://ideas.repec.org/a/plo/pone00/0168526.html
   My bibliography  Save this article

Joint Optimization of Distribution Network Design and Two-Echelon Inventory Control with Stochastic Demand and CO2 Emission Tax Charges

Author

Listed:
  • Shuangyan Li
  • Xialian Li
  • Dezhi Zhang
  • Lingyun Zhou

Abstract

This study develops an optimization model to integrate facility location and inventory control for a three-level distribution network consisting of a supplier, multiple distribution centers (DCs), and multiple retailers. The integrated model addressed in this study simultaneously determines three types of decisions: (1) facility location (optimal number, location, and size of DCs); (2) allocation (assignment of suppliers to located DCs and retailers to located DCs, and corresponding optimal transport mode choices); and (3) inventory control decisions on order quantities, reorder points, and amount of safety stock at each retailer and opened DC. A mixed-integer programming model is presented, which considers the carbon emission taxes, multiple transport modes, stochastic demand, and replenishment lead time. The goal is to minimize the total cost, which covers the fixed costs of logistics facilities, inventory, transportation, and CO2 emission tax charges. The aforementioned optimal model was solved using commercial software LINGO 11. A numerical example is provided to illustrate the applications of the proposed model. The findings show that carbon emission taxes can significantly affect the supply chain structure, inventory level, and carbon emission reduction levels. The delay rate directly affects the replenishment decision of a retailer.

Suggested Citation

  • Shuangyan Li & Xialian Li & Dezhi Zhang & Lingyun Zhou, 2017. "Joint Optimization of Distribution Network Design and Two-Echelon Inventory Control with Stochastic Demand and CO2 Emission Tax Charges," PLOS ONE, Public Library of Science, vol. 12(1), pages 1-22, January.
    • Handle: RePEc:plo:pone00:0168526
    DOI: 10.1371/journal.pone.0168526
    as

    Download full text from publisher

    File URL: https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0168526
    Download Restriction: no
    File URL: https://journals.plos.org/plosone/article/file?id=10.1371/journal.pone.0168526&type=printable
    Download Restriction: no
    File URL: https://libkey.io/10.1371/journal.pone.0168526?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Kutanoglu, Erhan & Mahajan, Mohit, 2009. "An inventory sharing and allocation method for a multi-location service parts logistics network with time-based service levels," European Journal of Operational Research, Elsevier, vol. 194(3), pages 728-742, May.
    2. Miranda, Pablo A. & Garrido, Rodrigo A., 2008. "Valid inequalities for Lagrangian relaxation in an inventory location problem with stochastic capacity," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 44(1), pages 47-65, January.
    3. Tancrez, Jean-Sébastien & Lange, Jean-Charles & Semal, Pierre, 2012. "A location-inventory model for large three-level supply chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(2), pages 485-502.
    4. Metin Türkay & Öztürk Saraçoğlu & Mehmet Can Arslan, 2016. "Sustainability in Supply Chain Management: Aggregate Planning from Sustainability Perspective," PLOS ONE, Public Library of Science, vol. 11(1), pages 1-18, January.
    5. Tsao, Yu-Chung & Mangotra, Divya & Lu, Jye-Chyi & Dong, Ming, 2012. "A continuous approximation approach for the integrated facility-inventory allocation problem," European Journal of Operational Research, Elsevier, vol. 222(2), pages 216-228.
    6. Jia Shu & Qiang Ma & Sijie Li, 2010. "Integrated location and two-echelon inventory network design under uncertainty," Annals of Operations Research, Springer, vol. 181(1), pages 233-247, December.
    7. S Maryam Masoumik & Salwa Hanim Abdul-Rashid & Ezutah Udoncy Olugu, 2015. "The Development of a Strategic Prioritisation Method for Green Supply Chain Initiatives," PLOS ONE, Public Library of Science, vol. 10(11), pages 1-33, November.
    8. Park, Sukun & Lee, Tae-Eog & Sung, Chang Sup, 2010. "A three-level supply chain network design model with risk-pooling and lead times," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 46(5), pages 563-581, September.
    9. Leyla Ozsen & Collette R. Coullard & Mark S. Daskin, 2008. "Capacitated warehouse location model with risk pooling," Naval Research Logistics (NRL), John Wiley & Sons, vol. 55(4), pages 295-312, June.
    10. Chen, Chia-Ho & Ting, Ching-Jung, 2008. "Combining Lagrangian heuristic and Ant Colony System to solve the Single Source Capacitated Facility Location Problem," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 44(6), pages 1099-1122, November.
    11. Melo, M.T. & Nickel, S. & Saldanha-da-Gama, F., 2009. "Facility location and supply chain management - A review," European Journal of Operational Research, Elsevier, vol. 196(2), pages 401-412, July.
    12. Shu-Hsien Liao & Chia-Lin Hsieh & Yu-Siang Lin, 2011. "A multi-objective evolutionary optimization approach for an integrated location-inventory distribution network problem under vendor-managed inventory systems," Annals of Operations Research, Springer, vol. 186(1), pages 213-229, June.
    13. Nagy, Gabor & Salhi, Said, 2007. "Location-routing: Issues, models and methods," European Journal of Operational Research, Elsevier, vol. 177(2), pages 649-672, March.
    14. Luathep, Paramet & Sumalee, Agachai & Lam, William H.K. & Li, Zhi-Chun & Lo, Hong K., 2011. "Global optimization method for mixed transportation network design problem: A mixed-integer linear programming approach," Transportation Research Part B: Methodological, Elsevier, vol. 45(5), pages 808-827, June.
    15. Wu, Ting & Shen, Houcai & Zhu, Cheng, 2015. "A multi-period location model with transportation economies-of-scale and perishable inventory," International Journal of Production Economics, Elsevier, vol. 169(C), pages 343-349.
    16. Snyder, Lawrence V. & Daskin, Mark S. & Teo, Chung-Piaw, 2007. "The stochastic location model with risk pooling," European Journal of Operational Research, Elsevier, vol. 179(3), pages 1221-1238, June.
    17. Miranda, Pablo A. & Garrido, Rodrigo A., 2004. "Incorporating inventory control decisions into a strategic distribution network design model with stochastic demand," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 40(3), pages 183-207, May.
    18. Pablo Miranda & Rodrigo Garrido, 2006. "A Simultaneous Inventory Control and Facility Location Model with Stochastic Capacity Constraints," Networks and Spatial Economics, Springer, vol. 6(1), pages 39-53, March.
    19. C. Archetti & M. G. Speranza & A. Hertz, 2006. "A Tabu Search Algorithm for the Split Delivery Vehicle Routing Problem," Transportation Science, INFORMS, vol. 40(1), pages 64-73, February.
    20. Zuo-Jun Max Shen & Collette Coullard & Mark S. Daskin, 2003. "A Joint Location-Inventory Model," Transportation Science, INFORMS, vol. 37(1), pages 40-55, February.
    21. Romeijn, H. Edwin & Shu, Jia & Teo, Chung-Piaw, 2007. "Designing two-echelon supply networks," European Journal of Operational Research, Elsevier, vol. 178(2), pages 449-462, April.
    22. Brandenburg, Marcus & Govindan, Kannan & Sarkis, Joseph & Seuring, Stefan, 2014. "Quantitative models for sustainable supply chain management: Developments and directions," European Journal of Operational Research, Elsevier, vol. 233(2), pages 299-312.
    23. Ambrosino, Daniela & Grazia Scutella, Maria, 2005. "Distribution network design: New problems and related models," European Journal of Operational Research, Elsevier, vol. 165(3), pages 610-624, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ali Khaleel Dhaiban, 2022. "Two models of inventory system with stochastic demand and deteriorating items: case study of a local cheese factory," OPSEARCH, Springer;Operational Research Society of India, vol. 59(1), pages 78-101, March.
    2. Wei Yu & Ruizhu Han, 2017. "Coordinating a Two-Echelon Supply Chain under Carbon Tax," Sustainability, MDPI, vol. 9(12), pages 1-13, December.
    3. Kai Kang & Wei Pu & Yanfang Ma & Xiaoyu Wang, 2018. "Bi-objective inventory allocation planning problem with supplier selection and carbon trading under uncertainty," PLOS ONE, Public Library of Science, vol. 13(11), pages 1-25, November.
    4. Barros, Júlio & Cortez, Paulo & Carvalho, M. Sameiro, 2021. "A systematic literature review about dimensioning safety stock under uncertainties and risks in the procurement process," Operations Research Perspectives, Elsevier, vol. 8(C).
    5. Pintarič, Zorka Novak & Varbanov, Petar Sabev & Klemeš, Jiří Jaromír & Kravanja, Zdravko, 2019. "Multi-objective multi-period synthesis of energy efficient processes under variable environmental taxes," Energy, Elsevier, vol. 189(C).
    6. Jahani, Hamed & Abbasi, Babak & Sheu, Jiuh-Biing & Klibi, Walid, 2024. "Supply chain network design with financial considerations: A comprehensive review," European Journal of Operational Research, Elsevier, vol. 312(3), pages 799-839.
    7. Khouloud Dorgham & Issam Nouaouri & Jean-Christophe Nicolas & Gilles Goncalves, 2022. "Collaborative hospital supply chain network design problem under uncertainty," Operational Research, Springer, vol. 22(5), pages 4607-4640, November.
    8. Yi Zhao & Ronghui Liu & Xi Zhang & Anthony Whiteing, 2018. "A chance-constrained stochastic approach to intermodal container routing problems," PLOS ONE, Public Library of Science, vol. 13(2), pages 1-22, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aaron Guerrero Campanur & Elias Olivares-Benitez & Pablo A. Miranda & Rodolfo Eleazar Perez-Loaiza & Jose Humberto Ablanedo-Rosas, 2018. "Design of a Logistics Nonlinear System for a Complex, Multiechelon, Supply Chain Network with Uncertain Demands," Complexity, Hindawi, vol. 2018, pages 1-16, November.
    2. Mehrdad Shahabi & Shirin Akbarinasaji & Avinash Unnikrishnan & Rachel James, 2013. "Integrated Inventory Control and Facility Location Decisions in a Multi-Echelon Supply Chain Network with Hubs," Networks and Spatial Economics, Springer, vol. 13(4), pages 497-514, December.
    3. Darmawan, Agus & Wong, Hartanto & Thorstenson, Anders, 2021. "Supply chain network design with coordinated inventory control," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 145(C).
    4. Shahabi, Mehrdad & Unnikrishnan, Avinash & Jafari-Shirazi, Ehsan & Boyles, Stephen D., 2014. "A three level location-inventory problem with correlated demand," Transportation Research Part B: Methodological, Elsevier, vol. 69(C), pages 1-18.
    5. Shahabi, Mehrdad & Tafreshian, Amirmahdi & Unnikrishnan, Avinash & Boyles, Stephen D., 2018. "Joint production–inventory–location problem with multi-variate normal demand," Transportation Research Part B: Methodological, Elsevier, vol. 110(C), pages 60-78.
    6. Schuster Puga, Matías & Tancrez, Jean-Sébastien, 2017. "A heuristic algorithm for solving large location–inventory problems with demand uncertainty," European Journal of Operational Research, Elsevier, vol. 259(2), pages 413-423.
    7. Zhang, Zhi-Hai & Unnikrishnan, Avinash, 2016. "A coordinated location-inventory problem in closed-loop supply chain," Transportation Research Part B: Methodological, Elsevier, vol. 89(C), pages 127-148.
    8. Tapia-Ubeda, Francisco J. & Miranda, Pablo A. & Macchi, Marco, 2018. "A Generalized Benders Decomposition based algorithm for an inventory location problem with stochastic inventory capacity constraints," European Journal of Operational Research, Elsevier, vol. 267(3), pages 806-817.
    9. Ahmadi-Javid, Amir & Hoseinpour, Pooya, 2015. "A location-inventory-pricing model in a supply chain distribution network with price-sensitive demands and inventory-capacity constraints," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 82(C), pages 238-255.
    10. Ali Diabat & Jean-Philippe Richard, 2015. "An integrated supply chain problem: a nested lagrangian relaxation approach," Annals of Operations Research, Springer, vol. 229(1), pages 303-323, June.
    11. Melo, M.T. & Nickel, S. & Saldanha-da-Gama, F., 2009. "Facility location and supply chain management - A review," European Journal of Operational Research, Elsevier, vol. 196(2), pages 401-412, July.
    12. Zhalechian, M. & Tavakkoli-Moghaddam, R. & Zahiri, B. & Mohammadi, M., 2016. "Sustainable design of a closed-loop location-routing-inventory supply chain network under mixed uncertainty," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 89(C), pages 182-214.
    13. Wenjun Ni & Jia Shu & Miao Song & Dachuan Xu & Kaike Zhang, 2021. "A Branch-and-Price Algorithm for Facility Location with General Facility Cost Functions," INFORMS Journal on Computing, INFORMS, vol. 33(1), pages 86-104, January.
    14. Pourya Pourhejazy & Oh Kyoung Kwon, 2016. "The New Generation of Operations Research Methods in Supply Chain Optimization: A Review," Sustainability, MDPI, vol. 8(10), pages 1-23, October.
    15. Shu, Jia & Li, Zhengyi & Shen, Houcai & Wu, Ting & Zhong, Weijun, 2012. "A logistics network design model with vendor managed inventory," International Journal of Production Economics, Elsevier, vol. 135(2), pages 754-761.
    16. Tancrez, Jean-Sébastien & Lange, Jean-Charles & Semal, Pierre, 2012. "A location-inventory model for large three-level supply chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(2), pages 485-502.
    17. Puntipa Punyim & Ampol Karoonsoontawong & Avinash Unnikrishnan & Vatanavongs Ratanavaraha, 2022. "A Heuristic for the Two-Echelon Multi-Period Multi-Product Location–Inventory Problem with Partial Facility Closing and Reopening," Sustainability, MDPI, vol. 14(17), pages 1-32, August.
    18. Gebennini, Elisa & Gamberini, Rita & Manzini, Riccardo, 2009. "An integrated production-distribution model for the dynamic location and allocation problem with safety stock optimization," International Journal of Production Economics, Elsevier, vol. 122(1), pages 286-304, November.
    19. Puntipa Punyim & Ampol Karoonsoontawong & Avinash Unnikrishnan & Chi Xie, 2018. "Tabu Search Heuristic for Joint Location-Inventory Problem with Stochastic Inventory Capacity and Practicality Constraints," Networks and Spatial Economics, Springer, vol. 18(1), pages 51-84, March.
    20. Schuster Puga, Matías & Minner, Stefan & Tancrez, Jean-Sébastien, 2019. "Two-stage supply chain design with safety stock placement decisions," International Journal of Production Economics, Elsevier, vol. 209(C), pages 183-193.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:plo:pone00:0168526. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: plosone (email available below). General contact details of provider: https://journals.plos.org/plosone/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.