Optimization models are a commonly used tool to identify cost efficient network flows. Complexity increases when various products move across different paths and transportation modes within one network. To address the challenges posed by this complexity, this thesis develops a mixed integer linear programming model for a uniform rental company. The company’s product families are routed through intermediary distribution centers, while others bypass these points and move directly to a regional distribution center. Various simulations were run with the objective of minimizing fixed costs, warehousing, inventory and transportation expenses. The function was constrained by flow balance, demand and capacity constraints. The optimal solution proposed a network that used less facilities than currently operated within the company, and some in new locations due to transportation cost savings. As volume increased, the network structure continued to shift further from the company’s current structure. Demand increased the influence of variable rates, while transportation lane rates were a significant factor in every version of the model run.
Authors: Ann-Marie Chopyak and Haotian Lee
Advisor: Dr. Bruce Arntzen