Manufacturer and warehouse selection for stable relationships in dynamic wholesaling and location problems

The author applies the concept of buyer-seller relationship to long-term planning of wholesaling operations. Current practices indicate that this kind of relational exchange reduces overall costs more than the traditional market exchange. The writer aims to help to operationalize this partnership by selecting a stable set of manufacturers and warehouses for an entire planning period. The author develops a multi-period optimization model incorporating constraints necessary for such stable solutions. This model requires a large number of variables and constraints, and is computationally challenging for most practical-sized problems. Therefore the writer proposes heuristic method to decompose the model into subproblems by partitioning the planning period into blocks of years and then synthesize the subproblem solutions. Such decomposition may also be useful to solve large dynamic location planning problems.