Reason based solutions and the complexity of distribution network design problems

Distribution network strategy, which defines the number, location, and market area of distribution facilities is an important component of a firm’s overall business strategy. While there have been considerable advances in optimization algorithms for solving distribution system design problems, they have not kept pace with the complexity of the problem facing managers. Consequently, non-optimizing methods such as scenario evaluation, which rely on human problem structuring and cognitive abilities, are frequently used to design distribution networks. This research experimentally examines the relationships between human problem solving performance and problem characteristics typical distribution network design problems. In addition, associations between human attributes and problem solving performance are explored. The results of a laboratory study indicate that several problem characteristics affect analyst performance. Problem size is the dominant factor. Analysts’ spatial reasoning abilities, education and experiences are also significantly associated with problem solving performance. Future research needs in this area are discussed.