EURO 2024 Copenhagen
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787. From isolated core facilities to interrelated service regions: understanding dependencies in supply chain network design

Invited abstract in session TD-61: Location in Logistics and Supply Chain Management, stream Locational Analysis.

Tuesday, 14:30-16:00
Room: S10 (building: 101)

Authors (first author is the speaker)

1. Hannah Bakker
Institute of Operations Research, Karlsruhe Institute of Technology
2. Stefan Nickel
Institute for Operations Research (IOR), Karlsruhe Institute of Technology (KIT)

Abstract

In supply chain network design (SCND), facility location decisions play a pivotal role. Yet, the individual role of and interdependence between facilities constituting an optimal solution remain inadequately understood. This lack of contextual information hinders decision-makers' confidence in these models, resulting in a gap between academic research and practical implementation.
Our study evaluates optimal and near-optimal solutions for a given instance, introducing concise measures to characterize commonalities in the decisions and the criticality and interdependence between individual location decisions. We relate these characteristics to the spatial distribution of candidates and customers and show that contrasting academic perception, the underlying spatial patterns yield little explanatory value for the stability of location decisions. We propose a pattern-recognition-based approach to show that well-performing solutions to an instance often share an implied division of the facility customer space, which not only explains the criticality and relationship between individual facilities but also allows anticipating how minor perturbations will affect the network. Our research offers a deeper understanding of facility location dynamics within SCND. This may empower decision-makers to trust and implement these models in real-world settings.

Keywords

Status: accepted

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