A distribution network design model for deteriorating item

In this paper, we study the Distribution Network Design problem integrating production, inventory and facilities location, involving a single supplier, some potential Distribution Centres (DCs) and multiple retailers. Distinct from traditional inventory location problems, the product in consideration is deteriorating item of which the deterioration, production and demand rates are all constant. Thus, the problem is to determine how many DCs to be set up, where to locate them, how to serve the retailers using these DCs, as well as the optimal production and inventory policies for the whole distribution network. The goal is to minimise the total deterioration, production, inventory, transportation and facilities location cost. We formulate this problem as a set partitioning mix-integer programming model.