Improved modelling of physical distribution

Abstract

Describes a procedure for modelling the costs of production and distribution between several production facilities with economies of scale and many customers who are widely dispersed. The problem takes the form of a large transportation problem on which is superimposed a cost minimization problem involving variable production quantities. These costs involve fixed costs for initiating production and variable costs with diminishing returns to scale. Models the problem as a non‐linear integer programming problem and then solves it using a recently developed non‐linear integer algorithm. Describes two applications in Australia and New Zealand and illustrates how comparison with a mixed‐integer linear programming formulation shows a significant improvement.

Citation

Murtagh, B.A. and Sims, J.W. (1995), "Improved modelling of physical distribution", International Journal of Physical Distribution & Logistics Management, Vol. 25 No. 8, pp. 47-52. https://doi.org/10.1108/09600039510099955