IDEAS home Printed from https://ideas.repec.org/a/spr/operea/v16y2016i3d10.1007_s12351-015-0209-6.html
   My bibliography  Save this article

Estimating distribution costs in a supply chain network optimisation tool, a case study

Author

Listed:
  • Björn Samuelsson

    (Luleå University of Technology)

Abstract

In a complex logistic environment it is critical to have efficient methods and tools to evaluate and improve the its efficiency. These tools must support the analysis with accurate results, but they must also be fast and easy enough to be used use in a complex practical setting. In this paper we present and discuss a deterministic single-period single-sourcing LP/MIP based method that the Linde Group has used for more than 100 projects for optimising the logistic network in the air-gas cylinder business. The model, called CSS (cylinder supply structure), includes a multi-echelon logistic network with transportation between plants and warehouses and distribution to several end-customers. The model allows deliveries to customers from all echelons in the supply network. Both the downstream flow of full cylinders and the upstream return of empty cylinders are included in the model. In general, more than 75 % of the total transportation- and distribution costs are caused by the final distribution to customers in a supply network as above. This paper will in particular analyse the distribution part of this model; how it is designed and how the cost is estimated. In order to evaluate the accuracy of the method we use empirical data to compare the model results with empirical results. The results showed that from the beginning the model overestimated the expected distances and costs for the distribution. With a rework and improved method to estimate the distribution cost, the model significantly improved its accuracy.

Suggested Citation

  • Björn Samuelsson, 2016. "Estimating distribution costs in a supply chain network optimisation tool, a case study," Operational Research, Springer, vol. 16(3), pages 469-499, October.
    • Handle: RePEc:spr:operea:v:16:y:2016:i:3:d:10.1007_s12351-015-0209-6
    DOI: 10.1007/s12351-015-0209-6
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s12351-015-0209-6
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s12351-015-0209-6?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
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jean-François Cordeau & Federico Pasin & Marius Solomon, 2006. "An integrated model for logistics network design," Annals of Operations Research, Springer, vol. 144(1), pages 59-82, April.
    2. A. M. Geoffrion & G. W. Graves, 1974. "Multicommodity Distribution System Design by Benders Decomposition," Management Science, INFORMS, vol. 20(5), pages 822-844, January.
    3. Hasan Pirkul & Vaidyanathan Jayaraman, 1996. "Production, Transportation, and Distribution Planning in a Multi-Commodity Tri-Echelon System," Transportation Science, INFORMS, vol. 30(4), pages 291-302, November.
    4. Tsiakis, Panagiotis & Papageorgiou, Lazaros G., 2008. "Optimal production allocation and distribution supply chain networks," International Journal of Production Economics, Elsevier, vol. 111(2), pages 468-483, February.
    5. G. Dantzig & R. Fulkerson & S. Johnson, 1954. "Solution of a Large-Scale Traveling-Salesman Problem," Operations Research, INFORMS, vol. 2(4), pages 393-410, November.
    6. Daganzo, Carlos F., 1984. "The length of tours in zones of different shapes," Transportation Research Part B: Methodological, Elsevier, vol. 18(2), pages 135-145, April.
    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. Toly Chen, 2016. "Competitive and Sustainable Manufacturing in the Age of Globalization," Sustainability, MDPI, vol. 9(1), pages 1-5, December.
    2. M. Tadaros & A. Migdalas & B. Samuelsson & A. Segerstedt, 2022. "Location of facilities and network design for reverse logistics of lithium-ion batteries in Sweden," Operational Research, Springer, vol. 22(2), pages 895-915, April.

    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. Blossey, Gregor & Hahn, Gerd J. & Koberstein, Achim, 2022. "Planning pharmaceutical manufacturing networks in the light of uncertain production approval times," International Journal of Production Economics, Elsevier, vol. 244(C).
    2. Cordeau, Jean-François & Laporte, Gilbert & Pasin, Federico, 2008. "An iterated local search heuristic for the logistics network design problem with single assignment," International Journal of Production Economics, Elsevier, vol. 113(2), pages 626-640, June.
    3. Osman, Hany & Demirli, Kudret, 2010. "A bilinear goal programming model and a modified Benders decomposition algorithm for supply chain reconfiguration and supplier selection," International Journal of Production Economics, Elsevier, vol. 124(1), pages 97-105, March.
    4. Camilo Ortiz-Astorquiza & Ivan Contreras & Gilbert Laporte, 2019. "An Exact Algorithm for Multilevel Uncapacitated Facility Location," Transportation Science, INFORMS, vol. 53(4), pages 1085-1106, July.
    5. Samir Elhedhli & Jean-Louis Goffin, 2005. "Efficient Production-Distribution System Design," Management Science, INFORMS, vol. 51(7), pages 1151-1164, July.
    6. Drexl, Andreas & Klose, Andreas, 2001. "Facility location models for distribution system design," Manuskripte aus den Instituten für Betriebswirtschaftslehre der Universität Kiel 546, Christian-Albrechts-Universität zu Kiel, Institut für Betriebswirtschaftslehre.
    7. Rahmaniani, Ragheb & Crainic, Teodor Gabriel & Gendreau, Michel & Rei, Walter, 2017. "The Benders decomposition algorithm: A literature review," European Journal of Operational Research, Elsevier, vol. 259(3), pages 801-817.
    8. Verter, Vedat & Dasci, Abdullah, 2002. "The plant location and flexible technology acquisition problem," European Journal of Operational Research, Elsevier, vol. 136(2), pages 366-382, January.
    9. Enrique Castillo & Roberto Mínguez & Antonio Conejo & Beatriz Pérez & Oscar Fontenla, 2013. "Estimating the parameters of a fatigue model using Benders’ decomposition," Annals of Operations Research, Springer, vol. 210(1), pages 309-331, November.
    10. Keskin, Burcu B. & Uster, Halit, 2007. "Meta-heuristic approaches with memory and evolution for a multi-product production/distribution system design problem," European Journal of Operational Research, Elsevier, vol. 182(2), pages 663-682, October.
    11. Mohammadi Bidhandi, Hadi & Mohd. Yusuff, Rosnah & Megat Ahmad, Megat Mohamad Hamdan & Abu Bakar, Mohd Rizam, 2009. "Development of a new approach for deterministic supply chain network design," European Journal of Operational Research, Elsevier, vol. 198(1), pages 121-128, October.
    12. Hanif Sherali & Ki-Hwan Bae & Mohamed Haouari, 2013. "A benders decomposition approach for an integrated airline schedule design and fleet assignment problem with flight retiming, schedule balance, and demand recapture," Annals of Operations Research, Springer, vol. 210(1), pages 213-244, November.
    13. de Sá, Elisangela Martins & de Camargo, Ricardo Saraiva & de Miranda, Gilberto, 2013. "An improved Benders decomposition algorithm for the tree of hubs location problem," European Journal of Operational Research, Elsevier, vol. 226(2), pages 185-202.
    14. Morton O’Kelly & Henrique Luna & Ricardo Camargo & Gilberto Miranda, 2015. "Hub Location Problems with Price Sensitive Demands," Networks and Spatial Economics, Springer, vol. 15(4), pages 917-945, December.
    15. Marufuzzaman, Mohammad & Eksioglu, Sandra D. & Li, Xiaopeng & Wang, Jin, 2014. "Analyzing the impact of intermodal-related risk to the design and management of biofuel supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 69(C), pages 122-145.
    16. Walther, Grit & Schatka, Anne & Spengler, Thomas S., 2012. "Design of regional production networks for second generation synthetic bio-fuel – A case study in Northern Germany," European Journal of Operational Research, Elsevier, vol. 218(1), pages 280-292.
    17. Mariel, Katharina & Minner, Stefan, 2017. "Benders decomposition for a strategic network design problem under NAFTA local content requirements," Omega, Elsevier, vol. 68(C), pages 62-75.
    18. Ortiz-Astorquiza, Camilo & Contreras, Ivan & Laporte, Gilbert, 2018. "Multi-level facility location problems," European Journal of Operational Research, Elsevier, vol. 267(3), pages 791-805.
    19. Holzapfel, Andreas & Potoczki, Tobias & Kuhn, Heinrich, 2023. "Designing the breadth and depth of distribution networks in the retail trade," International Journal of Production Economics, Elsevier, vol. 257(C).
    20. Ragheb Rahmaniani & Shabbir Ahmed & Teodor Gabriel Crainic & Michel Gendreau & Walter Rei, 2020. "The Benders Dual Decomposition Method," Operations Research, INFORMS, vol. 68(3), pages 878-895, May.

    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:spr:operea:v:16:y:2016:i:3:d:10.1007_s12351-015-0209-6. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.