Complicated Logistics Network Redesign Considering Service Differentiation

Abstract

Logistics network design is a strategic issue for nearly all companies. In the past, a logistics network once established was used for several periods. However, recent years have seen a rapidly changing economic environment. Trends in markets, shifts of customer clusters, changes of cost structures, and increasing competition are some of the aspects compelling companies to periodically redesign their logistics networks. In this paper, a complicated logistics network redesign problem is studied. To ensure the service levels of the important customers and products, weighting factors are employed, and a new service level measurement based on differentiation is proposed. Then a multi-objective model is formulated to redesign the complicated logistics network, and the NSGAII based solution procedure with determinant-code encoding structure is developed to achieve the Pareto solutions. The applicability of the proposed approach is demonstrated with the help of a real world case study from a Chinese automobile enterprise.