Multi-period location allocation problem with safety stock optimization

The design and management of a multi-stage production/distribution system is one of the most critical problem in logistics and in facility management. This manuscript deals with the so called facility location-allocation problem, i.e. with the simultaneous decisions regarding the design, management, and control of a distribution network. In particular the logistic problem object of this study deals with the determination of the number of facilities (e.g. production plants, warehousing systems, distribution centers, etc.), the choice of their locations and the assignment of customers demand to them, incorporating also tactical decisions regarding inventory control, production rates and service level determination. The purpose is to design, test, and compare innovative cost-based models and solutions for the dynamic (i.e. multi-period) location allocation problem (LAP) with safety stock levels determination and customer service level optimization. An experimental analysis conducted on an industrial application is presented and discussed.