Network Design

Network Design


Logistics network design is a vital strategic decision. It is very important to allocate the customer demand points to warehouses, and allocate products from warehouses to production plants. The best configuration must be able to deliver the goods to the customers at the least cost (commonly used objective) while satisfying the service level needs.

Network Design: Key Issues

  • Pick the optimal number, location, and size of warehouses and/or plants
  • Determine optimal sourcing strategy
  • Which plant/vendor should produce which product?
  • Determine best distribution channels
  • Which warehouses should service which customers?

Data for Network Design

  • A listing of all products
  • Location of customers, stocking points and sources
  • Demand for each product by customer location
  • Transportation rates
  • Warehousing costs
  • Shipment sizes by product
  • Order patterns by frequency, size, and season, content
  • Order processing costs
  • Customer service goals