Optimisation of logistics network of a multinational firm under uncertainty

Abstract

The problem of optimally determining the locations of plants and distribution centres for multinational firms is considered. This problem is formulated as a mixed-integer non-linear program which maximises the expected after-tax profit. Uncertainties of exchange rates and demand are considered in determining the facility locations. Heuristics to solve the problem are developed and bounds to evaluate the quality of the heuristics are derived. These methods are tested with data from a leading multinational manufacturer. The results show that the developed techniques have significant potential to maximise the profits of a multinational firm.