- Network Design
Design of supply chain networks is a key strategic decision in supply chain management. Our capstone sponsor Armada is a supply chain service provider to restaurant chains across the United States. The company is envisioning a redesign of their current service network based on two components: (1) the addition of new distribution centers (referred to as iDCs), located closer to high volume service areas, (2) the deployment of value-creating services from the iDCs. In this capstone, we develop a series of models to support these decisions. First, we build a model that identifies demand dense areas as “urban clusters” where an iDC would best serve Armada’s clients. Second, we develop a model that minimizes costs in the network while maximizing revenues through the defined additional services. The results of these models provide us with two distinct network configurations based on cost-minimization and profit-maximization: one placing iDCs by key demand-dense areas and the other favoring high revenue generating regions. This study shows that layering revenue-maximization methodology with cost-minimization algorithms in mixed integer linear programming will alter results and favor the highest revenue generation location(s).