A comparative model of facility network design methodologies

Operations managers use a variety of decision making tools when designing facility networks. Intuition, scenario evaluation, heuristic and optimization procedures are commonly applied. This paper discusses the relative advantages and disadvantages of the alternative methodologies for network design and proposes a cost trade-off model for choosing the best approach. Accessibility, precision and supplemental analysis are key factors to consider during the selection process. The authors also present the results of a laboratory experiment which measured the performance of analysts using intuition, scenario evaluation and enhanced scenario evaluation procedures to solve realistically-sized network design problems. The test problems included several sizes of single-echelon, multi-activity and two-echelon facility network design problems. The experimental results, when embedded into the cost trade-off model, provide quantitative guidelines for selecting the appropriate decision support procedures. Implications for practitiners, research and decision support system developers are provided.