Joint optimization of location and inventory decisions for improving supply chain cost performance

Joint Optimization of Location and Inventory Decisions for Improving Supply Chain Cost Performance. (December 2007) Burcu Barış Keskin, B.S., Boǧaziçi University, İstanbul, Turkey; M.S., Boǧaziçi University, İstanbul, Turkey Co–Chairs of Advisory Committee: Dr. Halit Üster Dr. Sıla Çetinkaya This dissertation is focused on investigating the integration of inventory and facility location decisions in different supply chain settings. Facility location and inventory decisions are interdependent due to the economies of scale that are inherent in transportation and replenishment costs. The facility location decisions have an impact on the transportation and replenishment costs which, in turn, affect the optimal inventory policy. On the other hand, the inventory policy dictates the frequency of shipments to replenish inventory which, in turn, affects the number of deliveries, and, hence, the transportation costs, between the facilities. Therefore, our main research objectives are to: • compare the optimal facility location, determined by minimizing total transportation costs, to the one determined by the models that also consider the timing and quantity of inventory replenishments and corresponding costs, • investigate the effect of facility location decisions on optimal inventory decisions, and • measure the impact of integrated decision-making on overall supply chain cost

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