Stefan Nickel (Saaarland University, Gemany)  

Short Biograhy  

Stefan Nickel obtained his PhD in mathematics at the Technical University of Kaiserslautern, Germany in 1995. He is professor at the Saaarland University and holds the chair of Operations Research and logistics. He is also member of the scientific advisory board, as well as the management board, of the Fraunhofer Institute for Applied Mathematics (ITWM) in Kaiserslautern , Germany . He has authored or coauthored 4 books as well as more than 60 scientific articles mainly in the area of location, supply chain management and logistics. In addition he has numerous research contracts with well known industrial companies (e.g. Lufthansa, Miele, SAP). Moreover, Stefan Nickel is editor-in-chief of Computers & Operations Research and associate editor of Operations Research Letters.

Lecture to be presented in EWI 2007  

Title  

Location Problems in Supply Chain Management

Abstract  

Structuring global supply chain networks is a complex decision making process. The typical inputs to such a process consist of a set of customer zones to serve, a set of products to be manufactured, shipped and sold, demand projections for the different customer zones, information about future conditions and costs (e.g. transportation and production) and resources (e.g. capacities, available materials).
Given the above inputs, companies have to decide, among other things, where to locate new service facilities (e.g. plants, warehouses), how to allocate procurement and production activities to the various manufacturing facilities of the network, and how to manage the distribution of products.
We propose a mathematical modeling framework capturing many practical aspects of network design problems simultaneously that have not received adequate attention in the literature. The aspects considered include: dynamic planning horizon, generic supply chain network structure, external supply of materials, inventory opportunities for goods, distribution of commodities, facility configuration, availability of capital for investments, and storage limitations. Moreover, network configuration decisions concerning the gradual relocation of facilities over the planning horizon are considered. To cope with fluctuating demands, capacity expansion and reduction scenarios are also analyzed as well as modular capacity shifts. The relation of the proposed modeling framework with existing models is discussed. For problems of reasonable size we report on our computational experience with standard mathematical programming software. In particular, useful insights on the impact of various factors on network design decisions (like number of time periods) are provided. Moreover, solutions approaches are presented using Lagrangian Relaxation and Benders Decomposition.
Also a specially designed heuristic approach is proposed. This heuristic approach explores the solution of the linear relaxation of the problem. It successively rounds the fractional variables corresponding to the 0/1 decisions of changing the facilities' status (i.e. open new / close existing facilities), and it is also used to roughly estimate the total number of facility configuration changes over the planning horizon. The proposed heuristic performs very well on a large set of randomly generated problems.
Some of the proposed models have been integrated into commercial software packages

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