Outbound supply chain network design with mode selection and lead time considerations

We present a large-scale network design model for the outbound supply chain of an automotive company that considers transportation mode selection (road vs. rail) and explicitly models the relationship between lead times and the volume of flow through the nodes of the network. We formulate the problem as a nonlinear zero–one integer program, reformulate it to obtain a linear integer model, and develop a Lagrangian heuristic for its solution that gives near-optimal results in reasonable time. We also present scenario analyses that examine the behavior of the supply chain under different parameter settings and the performance of the solution procedures under different experimental conditions.