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For manufacturing industries to promote globalization, it is important to optimize the strategic design of supply networks. In early stages of strategic design of global supply networks, with regards to the market strategy (what sale volume of which product to which market) and the manufacturing strategy (production capacity and number of manufacturing facilities), we have to optimize the facility locations. At this point, instead of determining the details of product types and delivery routes, we should focus on minimizing the total cost of the supply networks. After performing a conceivable risk assessment, we determine the locations of manufacturing facilities. In this paper, based on the information that can be learned in early stages of strategy design, we build a model of one-echelon supply network for facility locations design problem with capacity constraints. Next, we perform numerical experiments of the optimization using mixed-integer programming. As a specific example, the manufacturing plant is assumed to supply products to the 43 global markets. Our experiments evaluated the effectiveness of the proposed method with respect to this facility locations design problem.

Facility location design methodology of global supply network (A proposal of cost-based facility location design methodology)