Outbound supply chain network design with mode selection, lead times and capacitated vehicle distribution centers

Most distribution network design models considered to date have focused on minimizing fixed costs of facility location and transportation costs. Measures of customer satisfaction driven by the operational dynamics such as lead times have seldom been considered. We consider the design of an outbound supply chain network considering lead times, location of distribution facilities and choice of transportation mode. We present a Lagrangian heuristic that gives excellent solution quality in reasonable computational time. Scenario analyses are conducted on industrial data using this algorithm to observe how the supply chain behaves under different parameter values.