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A supply chain distribution network design model: An interactive fuzzy goal

programming-based solution approach

Article  in  The International Journal of Advanced Manufacturing Technology · January 2008

DOI: 10.1007/s00170-006-0842-6

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Int J Adv Manuf Technol (2008) 36:401–418
DOI 10.1007/s00170-006-0842-6

ORIGINAL ARTICLE

A supply chain distribution network design model:

An interactive fuzzy goal programming-based
solution approach
Hasan Selim & Irem Ozkarahan

Received: 20 April 2006 / Accepted: 12 October 2006 / Published online: 12 December 2006
# Springer-Verlag London Limited 2006

Abstract A supply chain (SC) distribution network design 1 Introduction

model is developed in this paper. The goal of the model is
to select the optimum numbers, locations and capacity The network design problem is one of the most compre-
levels of plants and warehouses to deliver products to hensive strategic decision issues that need to be optimized
retailers at the least cost while satisfying desired service for the long-term efficient operation of whole supply chain
level to retailers. A maximal covering approach is used in (SC). The decisions made for network design determine the
statement of the service level. The model distinguishes number and locations of raw material suppliers, manufac-
itself from other models in this field in the modeling turing plants, intermediate warehouses and distribution
approach used. Because of somewhat imprecise nature of centers as well as select the distribution channel from
retailers’ demands and decision makers’ (DM) aspiration suppliers to customers and identify the transportation
levels for the goals, a fuzzy modeling approach is used. volume among distributed facilities for an extended time
Additionally, a novel and generic interactive fuzzy goal horizon. Effective design and management of SC networks
programming (IFGP)-based solution approach is proposed assists in production and delivery of a variety of products at
to determine the preferred compromise solution. To explore low cost, high quality, and short lead times. It is obvious
the viability of the proposed model and the solution that an effective SC network structure is crucial in gaining a
approach, computational experiments are performed on competitive operational performance.
realistic scale case problems. To cope with the complexity of the SC network design
problem, the network has been divided into several stages
Keywords Supply chain . Distribution network design . in many previous studies. The number of stages is
Interactive fuzzy goal programming . Maximal covering determined based on the tradeoffs between fragmented
network problem complexity and the network integrality
Abbreviations [1]. For the SC network design problem, Jang et al. [2]
DM decision maker decompose the entire network into three sub-networks,
FGP fuzzy goal programming inbound network, distribution network and outbound
FST fuzzy set theory network.
GP goal programming A common objective in designing a distribution network
IFGP interactive fuzzy goal programming is to determine the least cost system design such that the
SC supply chain retailers’ demand is satisfied without exceeding the capac-
TCOST total cost ities of the warehouses and plants. This usually involves
INV investment making tradeoffs inherent among the cost components of
TSERVL total service level the system that include cost of opening and operating the
plants and warehouses and the inbound and outbound
H. Selim (*) : I. Ozkarahan
transportation costs.
Department of Industrial Engineering, Dokuz Eylul University,
35100 Izmir, Turkey There are two key decisions when designing a distribu-
e-mail: hasan.selim@deu.edu.tr tion network [3]: 1) Will products be delivered to the
I. Ozkarahan customer location or picked up from a pre-ordained site? 2)
e-mail: irem.ozkarahan@deu.edu.tr Will products flow through an intermediary? Based on the
402
choices for the two decisions, there are various types of
distribution network designs that may be used to move
products from manufacturing plants to customer. The
readers may refer to Chopra and Meindl [3] for the detailed
description of each distribution option and the discussion
on its strengths and weaknesses.
In this paper, we deal with a SC distribution network
comprised of a set of manufacturing plants, warehouses and
retailers. The network is illustrated in Fig. 1.
In the design option considered, inventory is stored
locally at retail stores and distributor warehouses. The main
advantage of such a network structure is that it can lower
the delivery cost and provide a faster response than other
networks. The major disadvantage is the increased inven-
tory and facility costs. As emphasized by Chopra and
Meindl [3], such a network is best suited for fast-moving
items where customers value the rapid response.
Cost or profit-based optimization is the most widely
used method for SC distribution network design problems.
However, more customer oriented approaches are required
in order to provide a sustainable competitive advantage in
today’s business environment. Nowadays, there is a trend to
consider customer service level as more critical. Customer
service level can be measured by various measures such as
customer response time, consistency of order cycle time,
accuracy of order fulfillment rate, delivery lead time,
flexibility in order quantity.
In this paper, we develop a multiobjective SC distribu-
tion network design model. The goal is to select the
optimum numbers, locations and capacity levels of plants
and warehouses to deliver the products to the retailers at the
Fig. 1 Structure of the SC
distribution network
Int J Adv Manuf Technol (2008) 36:401–418
least cost while satisfying the desired service level to the
retailers. Since the maximal covering approach [4] has
proved to be one of the most useful facility location models
from both theoretical and practical points of view, we use it
in statement of the service level. In the proposed model, a
coverage function which may differ among the retailers
according to their service standard request is defined for
each retailer.
Much of the decision making in the real world takes
place in an environment in which the goals, the constraints,
and the consequences of the possible actions are not known
precisely. As in the same manner, SCs operate in a
somehow uncertain environment. Uncertainty may be
associated with target values of objectives, external supply
and customer demand etc. Supply chain distribution
network design models developed so far either ignored
uncertainty or consider it approximately through the use of
probability concepts. However, when there is lack of
evidence available or lack of certainty in evidence, the
standard probabilistic reasoning methods are not appropri-
ate. In this case, uncertain parameters can be specified
based on the experience and managerial subjective judg-
ment. Fuzzy set theory (FST) [5] provides the appropriate
framework to describe and treat uncertainty [6]. In decision
sciences, fuzzy sets have had a great impact in preference
modeling and multi-criteria evaluation and have helped
bringing optimization techniques closer to the users needs.
As emphasized previously, SC distribution network
design problem is a strategic decision problem, the
optimization of which is crucial for the long-term efficient
operation of whole SC. The decisions to be made have
Int J Adv Manuf Technol (2008) 36:401–418
long-lasting effects and are costly, or sometimes impossible
to reverse. Because data are often incomplete and impre-
cise, SC distribution network design decisions generally use
forecasts based on aggregated data. As the environment or
system changes, such impreciseness also propagates and
can exert serious effects on the operation and management
of the system. Another source of impreciseness may be due
to vagueness in DMs’ interpretation or intent. This situation
occurs when exactness is not required or is not possible to
specify, or when exactness would unnecessarily limit
options. As stated by Reznik and Pham [7], exact or crisp
models when used in such cases would not be able to
faithfully simulate the richness and subtlety of the real work
space. Furthermore, in the worst case, misleading or
incorrect outcomes may result. Thus, there is a need to
articulate the problems arising from such impreciseness
with the view to construct appropriate models for their
representation, as well as suitable methods for processing
and manipulating them within the environment. Consider-
ing this need, in this study, we use FST in handling SC
distribution network design problem. More specifically, two
kind of impreciseness that may be faced in the problem,
i.e., imprecision in retailers’ demand and DMs’ aspiration
levels for the goals, are treated. Additionally, to provide
the DMs with a flexible and robust multi-objective
decision making technique, we propose a novel and
generic interactive fuzzy goal programming (IFGP)-based
solution approach. Through the solution approach, DMs
determine the preferred compromise solution.
The paper is further organized as follows: A review of
the related literature is presented in the next section.
Thereafter, basic concepts and the framework of fuzzy goal
programming (FGP), and the proposed IFGP-based solu-
tion approach are presented in Sects. 3 and 4, respectively.
Section 5 is devoted to the presentation of the crisp
formulation of the proposed SC distribution network design
model. Computational experiments are presented in Sect. 6.
Finally, conclusions are presented in Sect. 7.
2 Literature review
Numerous researchers have extensively studied facility and
demand allocation problems. Interested readers may refer to
detailed survey results, e.g., Francis et al. [8], Aikens [9],
Brandeau and Chiu [10], Beamon [11], Avella et al. [12]
and Pontrandolfo and Okogbaa [13].
Beamon [11] provides a focused review of literature in
the area of multi-stage SC design and analysis and classify
the models in the area into four categories: deterministic
analytic models, stochastic analytic models, economic
models, and simulation models. Avella et al. [12] present
their views on the state of the art and the future trends in
403
location analysis. Pontrandolfo and Okogbaa [13] review
the literature on the configuration as well as the coordina-
tion of the network of global facilities problems. They
define a framework that systematically addresses the global
manufacturing planning problem by identifying and classi-
fying the variables involved therein.
The last decades of the twentieth century witnessed a
considerable expansion of SCs into international locations.
This growth in globalization, and the additional manage-
ment challenges it brings, has motivated both practitioner
and academic interest in global SC management [14]. In
this paper, we do not consider the global issues in the
proposed model.
After mentioning some important reviews on SC
network design problem, we present a review of the several
relevant papers in the following. In our review, we focus
especially on the papers that develop or consider linear
deterministic SC network design models.
Geoffrion and Graves [15] presents a new method for the
solution of the problem addresses the optimal location of
distribution centers between plants and customers. They
develop an algorithm based on Benders’ decomposition for
solving multi-commodity distribution network design prob-
lem. Brown et al. [16] present a mixed integer model for a
multi-commodity production-distribution system. The ob-
jective of the model is to minimize the variable production
and shipping cost, fixed cost of equipment assignment and
plant operations. They apply to the model a primal
decomposition technique similar to Geoffrion and Graves’
[15] algorithm. Cohen and Lee [17] present a strategic
model structure and a hierarchical decomposition approach.
The scope of their work is to analyze interactions between
functions in a complete SC network. To model these
interactions they consider four sub modules where each
represents a part of the overall SC: (1) material control, (2)
production control, (3) finished goods stockpile, and (4)
distribution network control.
Pirkul and Jayaraman [18] consider a tri-echelon, multi-
commodity system concerning production, distribution and
transportation planning. The authors use a Lagrangean
relaxation-based heuristic to provide effective an effective
feasible solution. Jayaraman [19] studies the capacitated
warehouse location problem that involves locating a given
number of warehouses to satisfy customer demands for
different products. Pirkul and Jayaraman [1] extend the
previous problem by considering locating also a given
number of plants. They present a model for multi-
commodity, multi-plant, capacitated facility location prob-
lem, and develop a Lagrangean-based heuristic solution
procedure. Dogan and Goetschalckx [20] develop a mixed
integer linear programming model for the integrated design
of multi-period production-distribution systems. Their
paper contributes to the literature by developing an
404
integrated design methodology for strategic production and
distribution systems using primal decomposition theory. It
also provides an acceleration methodology for solving the
problem. Tragantalerngsak et al. [21] consider a two-
echelon facility location problem in which the facilities in
the first echelon are incapacitated and the facilities in the
second echelon are capacitated. The goal in their model is
to determine the number and locations of facilities in both
echelons in order to satisfy customer demand of the
product. They develop a Lagrangean relaxation-based
branch and bound algorithm to solve the problem. Lee et
al. [22] develop a multi-product mixed integer nonlinear
programming model to develop a capacity expansion of an
integrated production and distribution system. The system
comprises the multi-site batch plants and warehouses.
Melachrinodis and Min [23] design a multi-objective,
multi-period mixed integer programming model that deter-
mine the optimal relocation site and phase out schedule of a
combined manufacturing and distribution facility from SC
perspectives. Their research differentiates from the litera-
ture by considering both dynamic aspects and multi-
echelon network design. Sabri and Beamon [24] develop
a SC model that considers simultaneous strategic and
operational SC planning. The main contribution of the
work is the incorporation of production, delivery, and
demand uncertainty into one model. Pirkul and Jayaraman
[25] present an integrated logistic model, and develop an
efficient solution procedure for multi-commodity produc-
tion-distribution problem.
Tsiakis et al. [26] develop a strategic planning model for
SC networks. The paper takes into consideration flexible
production facilities in which a number of products are
produced making use of shared resources, the economies of
scale in transportation, and uncertainty in product demand.
Jang et al. [2] propose a supply network with a global bill
of material. They model design and planning problems of a
supply network in a single combined system. Talluri and
Baker [27] propose a multi-phase mathematical program-
ming approach for effective SC network design. Cakravastia
et al. [28] develop a mixed integer programming model of
the supplier (any manufacturer playing a lower-level
supporting role) selection process in designing a SC
network. The assumed objective of the SC is to minimize
the level of customer dissatisfaction, which is evaluated by
two criteria: (i) price and (ii) delivery lead time.
More recently, Beamon and Fernandes [29] study a
closed-loop SC in which manufacturers produce new
products and remanufacture used products. The multi-
period integer programming model uses the present worth
method to jointly analyze investment and operational costs.
Yeh [30] presents a hybrid heuristic algorithm to solve the
multi-stage SC network design problem. The algorithm
combines a greedy method, the linear programming
Int J Adv Manuf Technol (2008) 36:401–418
technique and three local search methods, the pair-wise
exchange procedure, the insert procedure and the remove
procedure. Eskigun et al. [31] deal with the design of a SC
distribution network considering lead time, location of
distribution facilities and choice of transportation mode.
They present a Lagrangian heuristic that gives good
solution quality in reasonable computational time. In a
recent paper, Amiri [32] addresses the distribution network
design problem in a SC system. The author develops a
mixed integer programming model and provides a heuristic
solution procedure.
The contribution of our current paper to the literature is
twofold: First, a fuzzy multi-objective model has been
developed for SC distribution network design problem.
Second, a novel and generic IFGP-based solution ap-
proach is proposed to determine the preferred compromise
solution.
3 Fuzzy goal programming
Goal programming (GP) is one of the most powerful, multi-
objective decision making approaches in practical decision
making. In a standard GP formulation, goals are defined
precisely. However, application of GP to the real life prob-
lems may be faced with two important difficulties. One of
which is expressing the DMs’ vague goals mathematically
and the second is the need to optimize all goals simulta-
neously. In such situations, the use of FST comes in handy.
Applying FST into goal programming (GP) has the
advantage of allowing for the vague aspirations of a DM,
which can then be qualified by some natural language
terms. The FST in GP was first considered by Narasimhan
[33]. Goal programming in fuzzy environment is further
developed by Hannan [34], Ignizio [35], Narasimhan and
Rubin [36], Tiwari et al. [37, 38] and others.
A fuzzy set A can be characterized by a membership
function, usually denoted by μ, which assigns to each
object of a domain its grade of membership in A. The
nearer the value of membership function to unity, the higher
the grade of membership of element or object in a fuzzy set
A. Various types of membership functions can be used to
represent the fuzzy set.
A typical FGP problem formulation can be stated as
follows:
9
Find xi ; i ¼ 1; :::; n >
>
>
>
>
Zm ðxi Þ
Z m m ¼ 1; :::; M >
=
ð1Þ
Zk ðxi Þ  Z k k ¼ M þ 1; :::; K
>
>
gj ð x i Þ  bj j ¼ 1; :::; J >
>
>
>
;
xi  0 i ¼ 1; :::; n
Int J Adv Manuf Technol (2008) 36:401–418 405

where, Zm(xi) is the mth goal constraint, Zk (xi) is the kth Table 1 The payoff table
goal constraint, Z m ðxi Þ is the target value of the mth goal,
Z1(X) Z2(X) ... ZM(X)
Z k ðxi Þ is the target value of the kth goal, gj (xi) is the jth
inequality constraint and bj is the available resource of X (1) Z11 Z12 ... Z1M
inequality constraint j. X (2) Z21 Z22 ... Z2M
..
In formulation (1), the symbols “≺ and ≻” denote the . ... ... ... ...
X (M) ZM1 ZM2 ... ZMM
fuzzified versions of “≤ and ≥” and can be read as
approximately less / greater than or equal to. These two
types of linguistic terms have different meanings. Under can be transformed to the following conventional linear
programming problem [40]:
approximately less than or equal to situation, the goal m is 9
allowed to be spread to the right-hand-side of Z m (Z m ¼ lm maximize 1 >
>
>
>
subject to >
>
where lm denote the lower bound for the mth objective) >
>
with a certain range of rm(Z m þ rm ¼ um , where um denote >
=
1  μ Zk k ¼ 1; :::; K
the upper bound for the mth objective). Similarly, with ð4Þ
gj ðxi Þ  bj i ¼ 1; :::; n; j ¼ 1; :::; J >
>
>
approximately
greater than or equal to, pk is the allowed >
>
xi  0 i ¼ 1; :::; n >
>
left side of Z k Z k  pk ¼ lk ; and Z k ¼ uk . >
>
;
As can be seen, GP and FGP have some similarities. 1 2 ½0; 1:
Both of them need an aspiration level for each objective.
These aspiration levels are determined by DMs. In addition
to the aspiration levels of the goals, FGP needs max-min 4 The proposed IFGP-based solution approach
limits (uk,lk) for each goal. While the DMs decide the max-
min limits, the linear programming results are starting By use of the interactive paradigm, interactive fuzzy
points and the intervals are covered by these results. multiobjective decision making approaches have been
Generally, the DMs find estimates of the upper (u) and investigated to improve the flexibility and robustness of
lower (l) values for each goal using payoff table (see multiobjective decision making techniques. They provide
Table 1). Therefore, the feasibility of each fuzzy goal is learning process about the system, whereby the DM can
guaranteed. learn to recognize good solutions and relative importance of
Here, Zm(X) denotes the mth objective function, and X(m) factors in the system [41]. The main advantage of
is the optimal solution of the mth single objective problem. interactive approaches is that the DM controls the search
Solving the problem with X(m) (m=1,..., M)
for each direction during the solution procedure and, as a result, the
objective, a payoff matrix with entries Zpm ¼ Zm X ðpÞ , m, efficient solution achieves his/her preferences [42]. Litera-
p=1,..., M can be formulated as presented in Table 1. Here, ture in the class of fuzzy interactive programming includes
um ¼ max ðZ1m ; Z2m ; . . . ; ZMm Þ and lm =Zmm, m=1,..., M. Werners [43, 44], Leung [45], Fabian et al. [46], Sasaki et
After constructing fuzzified aspiration levels with respect al. [47] and Baptistella and Ollero [48].
to the linguistic terms of approximately less than or equal Belman and Zadeh’s [39] min operator focuses only on
to, and approximately greater than or equal to, the the maximization of the minimum membership grade. It is
membership functions can be developed for each goal. not a compensatory operator. That is, goals with a high
Using Belman & Zadeh’s [39] min operator approach, degree of membership are not traded off against goals with
one can obtain the feasible fuzzy solution set by the a low degree of membership. Therefore, some computa-
intersection of all membership functions representing the tionally efficient compensatory operators (see [41]) can be
fuzzy goals. This solution set is then characterized by its used in setting the objective function in fuzzy programming
membership μF(x) which is: to investigate better results.
One criterion used to evaluate the performance of
mF ð xÞ ¼ mZ1 ð xÞ \ mZ2 ð xÞ:::: \ mZk ð xÞ compensatory operators in fuzzy optimization is monoto-
  nicity. Among the compensatory operators which are well
¼ min mZ1 ð xÞ; mZ2 ð xÞ; ::::; mZk ð xÞ ð2Þ
suited in solving multiobjective programming problems,
Then the optimum decision can be determined to be the Werners’ [49] ‘fuzzy and’ operator has an advantage of
maximum degree of membership for the fuzzy decision: being a strongly monotonically increasing function. That is,
it is positively related with the compensation rate. Further-
 
max mF ð xÞ ¼ max min mZ1 ð xÞ; mZ2 ð xÞ; :::; mZk ð xÞ ð3Þ more, it is easy to handle, and has generated reasonable
x2F x2F
consistent results in applications. For those reasons, we
By introducing the auxiliary variable λ, which is the employ Werners’s ‘fuzzy and’ operator in the proposed
overall satisfactory level of compromise, formulation (2) IFGP-based solution approach.
406 Int J Adv Manuf Technol (2008) 36:401–418

Werners [49] formulates the ‘fuzzy and’ operator as

follows:
( )
X
μD ð xÞ ¼ Max + min ðμk ð xÞÞ þ ð1  + Þð1=K Þ μk ð xÞ
k
k
ð5Þ
where K is the total number of fuzzy objectives and
constraints, μk(x) is the membership function of fuzzy goal
k, and + is the coefficient of compensation defined within
the interval [0,1]. By adopting min operator into Eq. (5),
the following linear programming problem can be formed:
X 9
maximize + 1 þ ð1  + Þð1=K Þ 1k >
>
>
=
k
subject to μ k ð xÞ  1 þ 1 k ; 8k 2 K; 8x 2 X >
>
>
;
1 ; 1 k ; + 2 ½0; 1:
ð6Þ

In real life decision problems, the relative importance of

the objectives assigned by the DMs may not be equal, and
may change over time. Different from ‘fuzzy and’ operator,
the proposed IFGP approach consider the relative impor-
tance of the objectives, and consequently provides a more
realistic structure.
Fig. 2 Flowchart of the proposed IFGP-based solution approach
To reflect the relative importance of λks to the objective
function, we develop and use a modified version of the
We assert that uncertainties of the input data and the
‘fuzzy and’ operator in the proposed solution approach.
DMs’ aspiration levels for the goals in multiobjective linear
More specifically, we use the following formulation:
programming problems can be treated through the proposed
P
maximize gl þ ð1  g Þ wk lk ð7Þ IFGP-based solution approach, and consequently, the
k preferred compromise solution can be determined. Before
subject to the constraints in formulation (6), where introducing the proposed solution approach, we think that
P
wk ¼ 1. presentation of some definitions and theoretic explanations
k related to the topic may be useful for clarity.
In order to determine the weights, there are some good
approaches in the literature, such as analytic hierarchy Definitions of the compromise solution and the preferred
process, weighted least square method and the entropy compromise solution are presented in the following [42].
method etc. Also, there are some fuzzy approaches for
finding crisp weights in fuzzy environment. However,
determination of the weights is not the focus of this study.
We think that the coefficient of compensation (γ) can be mij
treated as the degree of willingness of the SC partners to
sacrifice the aspiration levels for their goals to some extent
in the short run to provide the loyalty of their partners and/
or to strengthen their competitive position in the long run.
We also think that the coefficient of compensation can be
determined through a consensus decision making process.
In this process, complete unanimity is not the goal - that is
rarely possible. However, it is possible for each SC member
to have had the opportunity to express their opinion, be
listened to, and accept a group decision based on its logic dtij
and feasibility considering all relevant factors. This requires LBi UBi
the mutual trust and respect of each member. Fig. 3 Illustration of linear coverage function
Int J Adv Manuf Technol (2008) 36:401–418 407

Table 2 Formulation of the

objective functions

Compromise solution: A feasible vector X* Z S is called a – Step 2: Obtain efficient extreme solutions (payoff
compromise solution of the problem iff X* Z E and values) used for constructing the membership functions
Z ðX  Þ  ^X 2S Z ð X Þ where Z(X) is the objective function, S of the objectives. If the DM selects one of them as a
is the feasible region, $ stands for “minimum” and E is the preferred compromise solution go to Step 7. Otherwise
set of efficient solutions. go to Step 3.
This definition imposes two conditions on the solution – Step 3: Define the membership function of each fuzzy
for it to be a compromise solution. First, the solution should objective using upper and lower bounds of the
be efficient. Second, the compromise solution is the closest objectives.
solution to the ideal one that maximizes the underlying – Step 4: Considering the membership functions defined
utility function of the DM. In real-world cases, knowledge in Step 3 and γ (fix the value of γ to 1 in the first
of the set of efficient solutions E is not always necessary. iteration) develop the formulation of the problem using
On the other hand, the DMs’ preferences are to be proposed ‘modified fuzzy and’ operator.
considered in determining the final compromise solution. – Step 5: Obtain a compromise solution and present the
solution to the DM. If the DM accepts it, go to Step 7.
Preferred compromise solution: If the compromise solution Otherwise, go to Step 6.
satisfies the DMs’ preferences, then it is called the preferred – Step 6: Ask the DM if he want to modify the
compromise solution. coefficient of compensation (γ), and membership
functions of the objectives, and go to Step 3. Actually,
definition of a unique rule, e.g., selection of the initial
The proposed IFGP-based solution approach can be
value, change direction or rate of variation in each step,
summarized in the following steps:
by which the value of γ is varied is difficult since it
– Step 1: Develop the conventional (crisp) linear depends on DMs’ preferences. For instance, if the
programming formulation of the problem. problem under concern is so sensitive to γ, the rate of
variation should be sufficiently slow. When the DM
Table 3 Expected demand of the retailers tries to modify membership functions of the objectives
and constraints, only the following variations are
Demand for product I (ai l) Demand for product II (ai2)
acceptable [43]: a) the increase of lower bound (lk)
992 408 556 831 352 229 282 894 976 880 for the maximization objectives, b) the decrease of
423 573 388 683 378 898 968 845 885 988 upper bound (um) for the minimization objective, c) the
659 873 467 653 649 844 960 935 847 629
806 222 501 669 483 306 789 968 334 971
Table 4 Lower and upper bounds for the distance
107 377 777 701 709 845 195 610 776 743
500 439 759 264 449 758 736 976 923 339 Retailers Lower bound (LBi) Upper bound (UBi)
741 783 516 507 455 508 198 496 927 811
257 936 327 174 528 916 630 813 320 466 1–12 500 650
956 317 664 878 484 171 955 424 658 720 13–27 600 750
129 887 929 609 514 403 186 505 700 724 28–50 700 850
408 Int J Adv Manuf Technol (2008) 36:401–418

Table 5 The payoff table Table 7 Compromise solution results with min operator

TCOST INV TSERVL γ λ TCOST INV TSERVL μTCOST μINV μTSERVL

TCOST 2,720,667 2,663,710 52,046 1 0.5317 2,968,563 2,583,509 56,131 0.5317 0.5317 0.5317
INV 3,250,000 2,229,724 50,000
TSERVL 3,250,000 2,994,668 61,532

decrease of maximum tolerance (dj) is an acceptable
modification which can guarantee an efficient solution
in the recalculated compromise solution step. In order
to avoid the possibility of getting into infeasible
solution sets because of excess increase of lk or excess
decrease of um, we should increase lk and decrease um
as few requirements as possible in each iteration.
– Step 7: Stop.
The flow chart of these steps is shown in Fig. 2.
– The retailers have demand for a multitude of products,
and the warehouses are responsible for right-time
delivery of a right amount of products.
– Decision makers of the plants, warehouses and retailers
share information and collaborate with each other to
design an effective distribution network.
– Decisions are made within a single period.
5.1 Notations and definitions

Definitions of sets, parameters and decision variables of the

5 Crisp formulation of the proposed model proposed model are presented in the following.
– Sets
In this section, we present the crisp formulation of the
proposed SC distribution network design model. The goal I set of zones where retailers are located,
of the model is to select the optimum numbers, locations J potential warehouse locations,
and capacity levels of plants and warehouses to deliver the K potential plant locations,
products to the retailers at the least cost while satisfying the L set of products,
desired service level to the retailers. Maximal covering R set of capacity levels available for warehouses,
approach is used in statement of the service level, and a H set of capacity levels available for plants.
coverage function which may differ among the retailers
according to their service standard request is defined for – Parameters
each retailer. The proposed model distinguishes itself from Tjkl variable cost to transport one unit of product
other models in this field in the modeling approach used. l from the plant in zone k to the warehouse in
Because of somehow imprecise nature of retailers’ demand zone j
and DMs’ aspiration levels for the goals, fuzzy modeling Cijl variable cost to transport one unit of product
approach is used. Additionally, a novel and generic IFGP- l from the warehouse in zone j to the retailer in
based solution approach is proposed to determine the zone i
preferred compromise solution. fkh fixed portion of the operating cost of the plant in
The mathematical model is developed on the basis of the zone k with capacity level h
following assumptions: gjr fixed portion of the annual possession and
– The network considered encompasses a set of retailers operating costs of the warehouse in zone j with
with known locations, and possible discrete set of capacity level r
location zones/sites where warehouses and plants are OPkh opening cost of the plant in zone k with capacity
located. level h
– Different capacity levels are available to both the OWjr opening cost of the warehouse in zone j with
potential plants and warehouses. capacity level r
ail demand for product l by the retailer in zone i
sl required throughput capacity of a warehouses for
product l
Table 6 Lower and upper bounds for the objectives
Wjr throughput capacity of the warehouse in zone j
Objectives Lower bound Upper bound with capacity level r
ql required production capacity of a plant for
TCOST 2,720,667 3,250,000 product l
INV 2,229,724 2,994,668
Dkh capacity of the plant in zone k with capacity level h
TSERVL 50,000 61,532
dtij distance between zone i and zone j
Int J Adv Manuf Technol (2008) 36:401–418 409

Table 8 Solution results of the

model by the proposed solution γ λ TCOST INV TSERVL μTCOST μINV μTSERVL
approach
1a 0.5317 2,968,563 2,583,509 56,131 0.5317 0.5317 0.5317
0.9 0.5317 2,947,188 2,583,509 56,131 0.5721 0.5317 0.5317
0.8-0.7 0.5280 2,924,110 2,586,257 56,229 0.6157 0.5280 0.5402
0.6-0.5 0.5234 2,909,366 2,589,729 56,185 0.6435 0.5234 0.5364
0.4-0.3 0.4374 2,827,727 2,654,768 57,216 0.7977 0.4374 0.6257
0.2-0 0.4231 2,823,297 2,665,540 57,310 0.8061 0.4231 0.6339
a
min operator

mij coverage parameter that denotes the coverage level houses, the third one maximizes the total service level
of the retailer in zone i by the warehouse in zone j provided to the retailers.
LBi, the parameters that are used in defining the
UBi coverage parameter of the retailer in zone i, LBi 5.3 The constraints
and UBi denote lower and upper bound for the
distance, respectively (see Fig. 3). The constraints of the proposed model and their definitions
are presented in the following.
– Decision variables X
Xijl ¼ ail for all i 2 I and l 2 L; ð11Þ
Yjkl amount of product l transported to the warehouse in j
zone j from the plant in zone k, Constraint set (11) ensures that all demand from retailers
Xijl amount of product l transported to the retailer in zone is satisfied by warehouses.
i from the warehouse in zone j, XX X
Zjr binary variable that indicates whether a warehouse sl Xijl  Wjr Zjr for all j 2 J ; ð12Þ
with capacity level r is constructed in zone j, i l r

Pkh binary variable that indicates whether a plant with Constraint set (12) limits the distribution quantities that
capacity level h is constructed in zone k. are shipped from warehouses to retailers to the throughput
limits of warehouses.
X
5.2 The objective functions Zjr  1 for all j 2 J ; ð13Þ
r

Objective functions of the model are formulated as follows: Constraint set (13) ensures that a warehouse can be
As can be seen from Table 2, the first objective function assigned at most one capacity level.
X X
minimizes total cost made of: the transportation costs of Xijl  Yjkl for all j 2 J and l 2 L; ð14Þ
products from plants to warehouses and from warehouses to i k
retailers, and the fixed costs associated with the plants and Constraint set (14) guarantees that all demand from
the warehouses. While the second objective function retailer in zone i for product l is balanced by the total units
minimizes the investment in opening plants and ware-

Fig. 4 Solution results by the

proposed solution approach
410 Int J Adv Manuf Technol (2008) 36:401–418

Table 9 Solution results obtained by the proposed solution approach performed using Werners’ (1988) ‘fuzzy and’ operator and
in terms of utilization of the plants and warehouses the proposed solution approach, and the results are com-
γ Utilization of the plants Utilization of the warehouses pared.
A hypothetically constructed SC distribution network
Min Max Average Min Max Average design problem with 50 retailer zones, 20 potential
1 0.87 1 0.97 0.90 1.00 0.97
warehouse sites and 15 potential plant sites is considered
0.9 0.87 1 0.97 0.91 1.00 0.97 in the computational experiments. It is assumed that two
0.8-0.7 0.89 1 0.97 0.82 1.00 0.97 different types of product are demanded by the retailers.
0.6-0.5 0.87 1 0.97 0.90 1.00 0.97 Coordinates of the retailer zones, potential warehouses and
0.4-0.3 0.87 1 0.97 0.86 1.00 0.97 plant sites are generated from a uniform distribution over a
0.2-0 0.88 1 0.96 0.75 1.00 0.93 square with side 3000. Euclidean distances are used in
defining the coverage parameters. CPLEX 9.1 optimization
of product l available at warehouse in zone j that has been software is used at the solution stage.
supplied from open plants. Before presenting the computational experiments, let us
XX X explain the parameter structuring of the hypothetical SC
qkl Yjkl  Dkh Pkh for all k 2 K; ð15Þ distribution network design problem under concern.
j l h
Expected demand of the retailers for two different
Constraints in set (15) represent the capacity restrictions products is drawn from a uniform distribution between
of the plants in terms of their total shipments to the
100 and 1000 as given in Table 3.
warehouses. Five capacity levels are used for the capacities available
X
Pkh  1 for all k 2 K; ð16Þ to both the potential plants and warehouses. The opening
h cost of the warehouse in zone j with capacity level 3 (OWj3)
Constraint set (16) ensures that a plant can be assigned are drawn from a uniform distribution between 90,000 and
at most one capacity level. 120,000. The opening costs of the warehouses for the other
Zjr 2 f0; 1g for all j 2 J ; r 2 R; Pkh 2 f0; 1g capacity levels are computed as follows: OWj1 =0.75*OWj3,
ð17Þ OWj2 =0.85*OWj3, OWj4 =1.15*OWj3, OWj5 =1.25*OWj3.
for all k 2 K; h 2 H
Cost coefficients of OPkh are computed in terms of the
Finally, constraint set (17) enforces the binary and non- warehouses costs as OPkh =4*OWkh. Fixed portion of the
negativity restrictions on the decision variables. annual possession and operating costs of the warehouse in
zone j with capacity level 3 (gj3) and the plant in zone k
with capacity level 3 (fk3) are drawn from a uniform
6 Computational experiments distribution between 18,000 and 25,000 and 75,000 and
100,000, respectively. Fixed portion of the annual possession
6.1 The problem and parameter structuring and operating costs of warehouses and plants for the other
capacity levels are computed as follows: gj1 =0.75*gj3, gj2 =
To explore the viability of the proposed model and the 0.85*gj3, gj4 =1.15*gj3, gj5 =1.25*gj3 and fk1 =0.75*fk3, fk2 =
IFGP-based solution approach, computational experiments 0.85*fk3, fk4 =1.15*fk3, fk5 =1.25*fk3.
are presented in this section. The experiments are classified Required throughput capacity of a warehouse for product
into two categories. Imprecision in the DMs’ aspiration l and required production capacity of a plant for product l are
levels for the goals is treated in the first category, while given as follows: s1 =1, s2 =1 and q1 =1, q2 =2. The cost
imprecision in both the retailers’ demand and DMs’ coefficients Cijl and Tjkl are computed as being proportional
aspiration levels for the goals is treated simultaneously in to the Euclidean distance among the locations of warehouses
the second category. Solutions of the proposed model are and retailers, and plants and warehouses, respectively.

Table 10 Solution results of the model by Werners’ ‘fuzzy and’ operator

γ λ TCOST INV TSERVL μTCOST μINV μTSERVL

1 0.5317 2,968,563 2,583,509 56,131 0.5317 0.5317 0.5317

0.9 0.5317 2,947,407 2,583,509 56,135 0.5716 0.5317 0.5320
0.8-0.6 0.5280 2,924,274 2,586,257 56,233 0.6154 0.5280 0.5405
0.5 0.5234 2,909,366 2,589,729 56,185 0.6435 0.5234 0.5364
0.4-0.1 0.4448 2,879,877 2,649,159 58,338 0.6992 0.4448 0.7231
0 0.0000 2,879,877 2,649,159 58,338 0.6992 0.4448 0.7231
Int J Adv Manuf Technol (2008) 36:401–418 411

Fig. 5 Solution results of the

model by Werners’ ‘fuzzy and’
operator

Specifically, Cijl and Tjkl are drawn from a uniform
distribution between 0.025*dtij and 0.035*dtij and 0.045*dtjk
and 0.055*dtjk, respectively. The parameters that are used in
defining the coverage parameter of retailer in zone i (LBi,
UBi), are given in Table 4. Throughput limit of warehouse in
zone j with capacity level r (Wjr) and capacity of the plant in
zone k with capacity level h (Dkh) are taken as follows.
Wjr =4000, 6000, 8000, 10000, 12000, Dkh =15000,
20000, 30000, 35000, 40000.
6.2 Implementation category I: treatment of fuzzy
aspiration levels for the goals
In this category of experiments, the imprecision in goal
achievement is allowed through the specification of an
interval of acceptable achievement rather than a crisp
value.
µa il
6.2.1 Solution by the proposed approach
Solution of the SC distribution network design problem by
the proposed approach is presented step by step in the
following.
– Step 1:
The crisp formulation of the problem has been devel-
oped using Eqs. (8 to 17) in Sect. 5.
– Step 2:
Efficient extreme solutions of the problem are presented
in Table 5.
It is assumed here that the DMs don’t choose any of the
efficient extreme solutions as the preferred compromise
solution and proceed to Step 3.
– Step 3:
Considering the efficient extreme solutions given in
Table 5, the lower and upper bounds of the objectives can
be determined. In our case, the corresponding minimum
and maximum values of the efficient extreme solutions are
determined as the lower and upper bounds, respectively, as
presented in Table 6.

Table 11 The payoff table

TCOST INV TSERVL

TCOST 2,236,907 2,401,231 41,180

INV 8,405,707 1,480,163 11,072
TSERVL 21,173,751 8,076,997 73,839
ail TCOST 2,720,667 2,663,710 52,046
ail INV 3,250,000 2,229,724 50,000
0.8 a il 1.2 a il
TSERVL 3,250,000 2,994,668 61,532
Fig. 6 Membership function of the retailers’ demand
412 Int J Adv Manuf Technol (2008) 36:401–418

Membership functions of fuzzy objectives can be

formulated now using the upper and lower bounds as
follows:
8
>
> 0 if TCOST > 3; 250; 000
>
< 3; 250; 000  TCOST
μTCOST ¼ if 2; 720; 667 < TCOST  3; 250; 000
> 3; 250; 000  2; 720; 667
>
>
:
1 if TCOST  2; 720; 667:
ð18Þ

8
>
> 0 if INV > 2; 994; 668
>
< 2; 994; 668  INV
μINV ¼ if 2; 229; 724 < INV  2; 994; 668
>
> 2; 994; 668  2; 229; 724
>
:
1 if INV  2; 229; 724:
ð19Þ

8
> 1 if TSERVL > 61; 532
< TSERVL  50; 000
μTSERVL ¼ if 50; 000 < TSERVL  61; 532
>
: 61; 532  50; 000
0 if TSERVL  50; 000:
ð20Þ

– Step 4: 9
maximize γλ þ ð1  γ Þ½0:45λ1 þ 0:20λ2 þ 0:35λ3  > >
Considering the membership functions in Step 3, >
>
subject to >
>
and using the ‘modified fuzzy and’ operator, mathema- =
μTCOST λ þ λ1 ;
tical formulation of the problem can be developed as μINV λ þ λ2 ; >
>
>
follows: μTSERVL λ þ λ3 ; >
>
>
;
μTCOST ; μINV ; μTSERVL ; λ; λk ðk ¼ 1; 2; 3Þ; γ 2 ½0; 1
Table 12 Lower and upper bounds for the objectives
and other system constraints (11 to 17). ð21Þ
Objectives Lower bound Upper bound
As we stated previously, the relative weights for the
TCOST 2,236,907 3,250,000 membership functions of the objectives can be determined
INV 1,480,163 2,994,668 by the DMs using various methods. It is assumed here that,
TSERVL 50,000 73,839 the weights are determined by the DMs as presented in the
objective function of the model.
Table 13 Solution results of the model by the proposed solution approach

γ λ TCOST INV TSERVL μTCOST μINV μTSERVL

1 0.3327 2,912,471 2,484,436 57,947 0.3327 0.3327 0.3327

0.9-0.6 0.3327 2,911,738 2,484,436 57,931 0.3339 0.3327 0.3327
0.5 0.2938 2,758,226 2,542,970 57,004 0.4854 0.2938 0.2938
0.4-0.3 0.2669 2,680,598 2,583,538 56,362 0.5620 0.2669 0.2669
0.2 0.2390 2,628,604 2,625,496 55,697 0.6134 0.2390 0.2390
0.1 0.0932 2,511,505 2,500,082 52,221 0.7290 0.3223 0.0932
0 0.0000 2,428,348 2,486,397 50,161 0.8110 0.3314 0.0068
Int J Adv Manuf Technol (2008) 36:401–418 413

– Step 5: Table 14 Solution results of the proposed model in terms of

By fixing the value of γ to 1, the solution given in utilization of the plants and warehouses
Table 7 is obtained. γ Utilization of the plants Utilization of the warehouses
It is assumed here that the DMs need more improvement
in the results, and want to consider the solution results of Min Max Average Min Max Average
the model with different coefficient of compensation (γ) to 1 0.97 1 0.99 0.67 1 0.95
make the final decision. 0.9-0.6 0.92 1 0.97 0.61 1 0.92
– Step 6: 0.5 1 1 1 0.79 1 0.97
In this step, a set of solutions corresponding to the 0.4-0.3 0.97 1 0.99 0.63 1 0.91
different values of γ are obtained and presented to the DMs. 0.2 0.95 1 0.98 0.56 1 0.93
The results are given in Table 8. 0.1 0.97 1 0.99 0.67 1 0.95
0 0.87 1 0.97 0.67 1 0.95
The results presented in Table 8 are illustrated graph-
ically in Fig. 4.
Besides the cost, investment and service level, utiliza-
tions of the plants and warehouses are important indicators
which should be considered in designing a SC distribution 6.2.2 Solution by Werners’ ‘fuzzy and’ operator
network. Therefore, we compare the solution results in
terms of utilizations of the plants and warehouses in Using Werners’ ‘fuzzy and’ operator we can formulate the
Table 9. SC network design problem under concern as follows:
If the results of the model with γ=0.4 (or 0.3) are
compared to those of the model with γ=1, it can be realized 9
that a substantial increase (50.03%) can be provided in maximize + 1 þ ð1  + Þ½ð1 1 þ 1 2 þ 1 3 Þ=3 >
>
>
>
achievement level of the membership function of total cost subject to >
>
=
objective (μTCOST) with a decrease by 17.74% in that of the μTCOST  1 þ 1 1
μINV  1 þ 1 2 >
>
second (μINV) objective. Furthermore, achievement level of >
>
μTSERVL  1 þ 1 3 >
>
the total service level objective is also improved by ;
μTCOST ; μINV ; μTSERVL ; 1 ; 1 k ðk ¼ 1; 2; 3Þ; + 2 ½0; 1
17.68%. It can also be concluded that all solution results
seem reasonable from the utilization rates of the plants and ð22Þ
warehouses point of view. The average utilization rates are and other system constraints (11 to 17).
considerably high in all of the solution alternatives. In the same manner as the previous application, a set of
Considering the results given in Tables 8 and 9 together, solutions corresponding to the different values of γ are
let’s suppose that the DMs accept the results of the model obtained in this application. The results are presented in
with γ=0.4, and that they consider this solution the Table 10 and illustrated graphically in Fig. 5.
preferred compromise solution. Then, the procedure is
terminated at Step 7.
Fig. 7 Solution results of the
model with the proposed solu-
tion approach
414 Int J Adv Manuf Technol (2008) 36:401–418

Table 15 Solution results of the problem with 'fuzzy and' operator

γ λ TCOST INV TSERVL μTCOST μINV μTSERV

1 0.3327 2,912,471 2,484,436 57,947 0.3327 0.3327 0.3327

0.9-0.6 0.3327 2,911,738 2,484,436 57,931 0.3339 0.3327 0.3327
0.5 0.3313 2,914,338 2,470,430 57,898 0.3313 0.3420 0.3313
0.4 0.3308 2,914,819 2,467,130 57,887 0.3308 0.3442 0.3308
0.3 0.2948 2,763,686 2,535,344 57,028 0.4800 0.2989 0.2948
0.2 0.2762 2,706,503 2,569,532 56,584 0.5365 0.2762 0.2762
0.1 0.2443 2,654,303 2,573,163 55,823 0.5880 0.2738 0.2443
0 0.0000 2,500,376 2,430,673 51,679 0.7399 0.3684 0.0704

Considering the results given in Table 10, let’s DMs don’t select any of the efficient extreme solutions as
suppose that the DMs accept again the results of the model the preferred compromise solution and proceed to the next
with γ=0.4. step.
Considering the efficient extreme solutions given in
6.3 Implementation category II: treatment of fuzzy demand Table 11, the lower and upper bounds of the objectives are
and fuzzy aspiration levels for the goals determined as documented in Table 12.
Using the ‘modified fuzzy and’ operator, mathematical
We assume here that the retailers’ demand pattern can be formulation of the problem can be developed as follows:
affected to some extent using demand management tech-
niques. That is, the retailers’ demand can be altered within a 9
max imize >
range. Under this assumption, we state retailers’ demand as >
>
γλ þ ð1  γ Þ½0:45λ1 þ 0:20λ2 þ 0:35λ3  >
>
fuzzy parameters using triangular membership function as >
>
>
>
illustrated in Fig. 6. The lower and upper bounds for each of >
>
subject to =
the retailer’s demand are assumed 80% and 120% of their μTCOST λ þ λ1 ; ð23Þ
corresponding expected demand (ail) values, respectively. μINV λ þ λ2 ; >
>
>
>
>
>
μTSERVL λ þ λ3 ; >
>
μDEMANDil λ; >
>
6.3.1 Solution by the proposed approach >
;
μTCOST ; μINV ; μTSERVL ; μDEMANDil ; λ; λk ; γ 2 ½0; 1
Efficient extreme solutions of the problem are presented in
and other system constraints (11 to 17).
Table 11. The upper part of the table is constructed by
A set of solutions for the above problem with different
solving the problem considering the individual objective
values of γ are obtained and presented in Table 13.
functions subject to fuzzy constraint set while the crisp
The solution results presented in Table 13 are illustrated
constraint set is considered in the lower part.
graphically in Fig. 7.
As in the same manner of our preceding experiment with
The solution results are also compared in terms of
the proposed solution approach, it is assumed here that the
utilization of the plants and warehouses in Table 14.
Fig. 8 Solution results of the
problem with Werners’ ‘fuzzy
and’ operator
Int J Adv Manuf Technol (2008) 36:401–418 415

Table 16 Comparison of the

solution results Solution approach

Implementation category Objective function Proposed Werners’ 'fuzzy

approacha and' operatorb

Category I: Fuzzy aspiration TCOST 2,827,727 2,879,877

levels for the goals INV 2,654,768 2,649,159
TSERVL 57,216 58,338
Utilization of plants min 0.87 0.84
max 1 1
aver. 0.97 0.95
Utilization of warehouses min 0.86 0.81
max 1 1
aver. 0.97 0.97
Category II: Fuzzy demand TCOST 2,758,226 2,763,686
and fuzzy aspiration levels for the INV 2,542,970 2,535,344
goals TSERVL 57,004 57,028
Utilization of plants min 1 0.98
max 1 1
a
γ=0.4 and γ=0.5 for the first
aver. 1 1
and second category,
respectively. Utilization of warehouses min 0.79 1
b
γ=0.4 and γ=0.3 for the first max 1 1
and second category, aver. 0.97 1
respectively.

Comparing the results given in Table 13 together with 6.3.2 Solution by Werners’ ‘fuzzy and’ operator
consideration of the utilization of the plants and ware-
houses, let’s suppose that the DMs accept the results of the Using Werners’ ‘fuzzy and’ operator, we obtain a set of
model with γ=0.5, and that they consider this solution the solutions corresponding to different values of γ. The results
preferred compromise solution. Then, the procedure is are presented in Table 15 and illustrated graphically in
terminated at Step 7. Fig. 8.
If the results of the model with γ=0.5 are compared to
those of the model with γ=1, it can be realized that 6.4 Comparison of the results
substantial increase (45.9%) can be provided in achieve-
ment level of the total cost objective with a decrease by The solution results obtained by the proposed solution
11.7% in those of the second and third objective function. approach and Werners’ ‘fuzzy and’ operator for the two
In terms of utilization rates of the plants and warehouses, different implementation categories are compared in
the model with γ=0.5 provides better results compared to Table 16.
the other solutions. The results presented in Table 16 are illustrated
graphically in Figs. 9, 10 and 11.
If the results presented in Table 16 are analyzed, it can
be seen that, for the first category of experiments, the
Fig. 9 Comparison of the
results in terms of TCOST and 2,900,000
INV objectives 2,850,000
2,800,000
2,750,000
2,700,000
2,650,000
Proposed approach
2,600,000
2,550,000 Werners' approach
2,500,000
2,450,000
2,400,000
TCOST INV TCOST INV

Category I Category II
416 Int J Adv Manuf Technol (2008) 36:401–418

Fig. 10 Comparison of the

results in terms of TSERVL
60,000

58,000

TSERVL
56,000 Proposed approach
Werners' approach
54,000

52,000

50,000
Category I Category II

relative importance levels assigned to the membership 7 Conclusions

functions of the objectives can be reflected to the results
to some extent by the proposed solution approach. More
specifically, by using the proposed approach with given
weighting structure, total cost objective can be improved by
1.81% while total service level objective is deteriorated by
1.92%, and investment objective remains almost the same
compared to the results by Werners’ approach. On the other
hand, the results obtained by the proposed and Werners’
approaches are almost the same for the second category of
experiments. That is, the relative importance of the
objectives doesn’t influence on the results of the problem
instance. It can be concluded here that, the proposed
solution approach may provide different and even more
preferable results compared to the Werners’ ‘fuzzy and’
approach. But, it should be emphasized that the weight
structure and the structure of the problem, e.g., fuzzy vs.
crisp parameters, influences the level of differences
between the two approaches. The proposed IFGP-based
solution approach can be employed by the DMs as a
flexible and robust multi-objective decision making ap-
proach to determine the preferred compromise solution.
A multi-objective linear programming model is developed
in this paper to address the SC distribution network design
problem. The goal of the model is to select the optimum
numbers, locations and capacity levels of plants and
warehouses to deliver the products to the retailers at the
least cost while satisfying the desired service level. The
model distinguishes itself from other models in this field in
the modeling approach used. Decision makers’ imprecise
aspiration levels for the goals and retailers’ imprecise
demand are incorporated into the model using fuzzy
modeling approach, which is otherwise not possible by
conventional mathematical programming methods.
This paper also contributes to the literature by proposing
a novel and generic IFGP-based solution approach which
determines the preferred compromise solution for multi-
objective decision problems.
Results of the computational experiments performed on
realistic scale case problems explore the viability of the
proposed solution approach and the SC distribution
network design model. The results also point out that SC

Fig. 11 Comparison of the 1

results in terms of utilization of
the plants and warehouses 0.9

0.8

0.7

0.6
Proposed approach
0.5
Werners' approach
0.4

0.3
min aver. min aver. min aver. min aver.

Util.of plants Util. of Util.of plants Util. of

warehouses warehouses

Category I Category II
Int J Adv Manuf Technol (2008) 36:401–418
distribution network design problem can be handled in a
more flexible, robust and realistic way through the
proposed model and the IFGP-based solution approach.
The proposed model can be used in real life industrial
application in restructuring, i.e., expanding or narrowing, of
an existing SC distribution network besides the design of a
new network. Such a strategic model can be a part of a
decision support system developed for the collaborative SC
management practices.
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