Distribution center network design under trade credits

This paper considers a distribution center network design problem under trade credits. An outside supplier provides a credit period to the distribution company. The key decisions of the distribution company are where to locate the distribution centers (DCs), how to assign retail stores to DCs and the joint replenishment cycle time at DCs such that the total network cost is minimized. This paper uses a continuous approximation method to formulate the model. One algorithm based on nonlinear optimization is provided to solve the supply chain network design problem. This paper also considers a special case when the distribution company only determines the inventory decision. Numerical studies illustrate the solution procedures and the effects of the parameters on decisions and costs. The results and the modeling approach are useful references for managerial decisions.