Future-Value Assessment of a Multi-Facility Allocation Problem with Inventory Return Costs

Abstract

Decision models within the logistic field are crucial for the optimization of economic resources throughout the supply chain. In this context, facility allocation is important to achieve an efficient distribution network. The present work extends on the multi-facility allocation problem by integrating the time-dependent costs associated to the dynamic behavior of inventory management and transportation through a planning horizon. These costs are evaluated by considering their future-value in different periods of time and an integrated cost metric which includes distance, supply frequency, and fuel performance. The contribution of this approach leads to support the decision process regarding the viability of the investment required to establish a set of facilities in terms of future costs, how these costs may increase if the decision is delayed, and when the investment is to be compensated by the savings obtained by the solution of the multi-facility allocation problem.