Network Design determines the physical configuration and infrastructure of the supply chain. Key decisions are made on the number, locations, and size of manufacturing plants and warehouses, the assignment of retail outlets to warehouses, etc. At this stage, major sourcing decisions are also made. The typical planning horizon is a few years.
Long-term location, capacity, technology, and supplier selection decisions have to be made under considerable uncertainty with respect to market development and changing economic and legal conditions. Our research in supply chain design focuses on the development of multi-stage stochastic optimization methods for decision support under demand, freight rate, and exchange rate uncertainty. We further investigate different approaches to uncertainty and scenario modeling.
If companies expand and want to build new factories or storage places, the Warehouse Location Problem calculates among a set of possible locations the ones, that minimize fixed costs and operational costs by fulfilling the required demand.
Traffic network design:
Facing increasing demand on transportation in cities, the traffic networks have to be extended. As the budget is usually limited, the question is: Which projects should be built to improve the flow inside a traffic network.
For many years, OEM’s constantly achieved significant cost savings through outsourcing to low cost countries. However, due to rising cost and other circumstances, the phenomenon „reshoring“ has recently emerged. It describes the process of moving some or all manufacturing back to its original source.
- Fontaine, P., Minner, S. (2014), Benders Decomposition for Discrete-Continuous Linear Bilevel Problems with Application to Traffic Network Design, Transportation Research Part B: Methodological 70: 163-172.