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the physical structure of its logistics network from time to time. Major drivers
of network re-design projects comprise variations in the demand pattern and its
spatial distribution as well as increased cost pressure and service requirements.
Moreover, mergers, acquisitions, and strategic alliances also trigger the expansion
or reconfiguration of a logistics network in order to exploit the benefits and
synergies of integrating the acquired operations. Typically, re-design activities take
the form of opening new facilities (e.g., to be closer to new markets) and closing
existing facilities (e.g., to consolidate operations). As highlighted by Ballou (
2001
)
and Harrison (
2004
), well-conceived re-design decisions can result in a 5-15 %
reduction of the overall logistics costs, with 10 % being often achieved.
The (re-)design of a logistics network is a complex undertaking. It concerns
not only determining the number, size, and capacity of facilities (e.g., plants and
warehouses) to be operated but it also involves planning and integrating a manifold
of logistics functions that such facilities will perform. These functions range from
procurement of raw materials, transformation of these materials into semi-finished
and end products, and the delivery of finished products to customers through one or
several distribution stages. Depending on the industrial context, strategic decisions
may also concern the collection and recovery of product returns.
This chapter provides a holistic approach to strategic network planning by
integrating facility location decisions with decisions relevant to the configuration of
a logistics network. The integrated view will be illustrated by two general modeling
frameworks for designing forward and reverse logistics networks.
The remainder of the chapter is organized as follows. Section
16.2
presents
a comprehensive model for logistics networks with forward flows. Due to its
generic features, the model applies to a wide range of situations. Its relation with
other models proposed in the literature is established and extensions are discussed.
Section
16.3
focuses on reverse logistics network design (RLND) and introduces a
generic mathematical formulation for the design of a multi-purpose reverse logistics
network. Furthermore, some special cases and extensions of the proposed model are
presented. Section
16.4
addresses various representative applications of forward and
reverse LND problems from different areas. Finally, in Sect.
16.5
future research
directions are discussed.
16.2
A General Logistics Network Design Model
We introduce a base model that captures the main features of an LND problem.
The starting point is either a potential framework for a new network structure or an
existing network whose physical structure is to be re-designed. To this end, a general
network typology, as depicted in Fig.
16.1
, is considered. Any number of facility
layers and any system of transportation channels can be modeled. The network
entities are categorized in so-called
selectable
and
non-selectable
facilities. The
former group includes a set of facilities already in place, that could be closed, and a
set of potential locations for establishing new facilities. In contrast, non-selectable
