Designing a Production and Distribution Network

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Designing a Production and Distribution Network

Manufacturers today face great competitive pressure to get their products to market more quickly as well as to reduce their production and distribution costs. Therefore, any corporation that distributes its products over a wide geographical area (or even worldwide) must pay continuing attention to the design of its production and distribution network.

This design involves addressing the following kinds of yes-or-no decisions:

Should a certain plant remain open?

Should a certain site be selected for a new plant? Should a certain distribution center remain open?

Should a certain site be selected for a new distribution center?

If each market area is to be served by a single distribution center, then we also have an- other kind of yes-or-no decision for each combination of a market area and a distribution center.

Should a certain distribution center be assigned to serve a certain market area? For each of the yes-or-no decisions of any of these kinds:

INTRODUCTION TO OPERATIONS RESEARCH-0095

The first application vignette in this section describes how the Midwest Independent Transmission Operator used a huge BIP model of this type to save literally billions of dollars. The product being produced and distributed through a network in this case is electricity.

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