Bicriteria cost versus service analysis of a distribution network – a case study

In order to improve the distribution system for the Nordic countries the BASF AG considered 13 alternative scenarios to the existing system. These involved the construction of warehouses at various locations. For every scenario the transportation, storage, and handling cost incurred was to be as low as possible, where restrictions on the delivery time were given. The scenarios were evaluated according to (minimal) total cost and weighted average delivery time. The results led to a restriction to only three cases involving only one new warehouse each. For these, a more accurate model for the cost was developed and evaluated, yielding results similar to a simple linear model. Since there were no clear preferences between cost and delivery time, the final decision was chosen to represent a compromise between the two criteria.