Performance-based strategic resource allocation in supply networks

One driving force behind continued logistics planning research is firms' need to maintain competitive performance and efficient resource allocation. Operations research has been instrumental in advancing logistics planning research particularly in the petroleum industry. The impact and potential of incorporating performance imperatives, however, have been largely unaddressed while the problem's general complexity has grown. This paper focuses on performance planning through resource allocation in supply networks by developing a profit-maximizing network model for distribution planning, and explicitly incorporating order performance criteria for distribution centers and delivery vehicles. The approach has been tested on forty realistic-sized problems, and tradeoff models provide insight and guidelines for assessing the interaction among expected profits, customer service, and operational efficiency for resource acquisition and redistribution. Managerial implications are also provided.