A model for designing multiple products logistics networks

Purpose – This study aims to provide a model for designing logistics networks with multiple products. In such a design model, it is important to determine the operation-related parameters accurately. Design/methodology/approach – An iterative process is used to design a logistics network. First, a mixed integer-programming (MIP) model is used to determine the configuration of the network. Then, based on the output of MIP model, an inventory-planning model for multiple products is developed to decide the lot size and ordering frequency for each product at each node of the logistics network, and a vehicle routing model is used to find the shortest product delivery routes from wholesalers to retailers. After that, the operation-related parameters are recalculated and updated, and the configuration of the logistics network is re-optimized. Such process proceeds until it converges. By this iterative process, the operation-related parameters can be determined more accurately. Findings – The iterative process proposed in the paper possesses following advantages: determining operation-related parameters accurately, and adapting to changing market quickly. Research limitations/implications – A typical logistics network used to distribute multiple products is considered as target system to apply this model. This paper does not handle a real case study as an application example. Originality/value – This paper proposes a modular design approach: different types of mathematics are used for different modules. The model developed in this paper is realizable as software tool in logistics management.