Decision Sciences Journal
Volume 29, Number 3
Summer 1998
Designing Distribution Systems to Support Vendor Strategies
in Supply Chain Management
E. Powell Robinson, Jr.
Department of Business Analysis, College of Business, Texas A&M
University, College Station, TX 77843-4217, email: robinso@tamvm1.tamu.edu
Ronald K. Satterfield
ISDS Department, College of Business Administration, University
of South Florida, Tampa, FL 33620, email: rsatterf@coba.usf.edu
Abstract: The interactions among a firm’s distribution
strategy, market share, and distribution costs are an important
consideration in the design of supply chain networks. However,
these interactions are largely ignored by existing distribution
system design methodologies, which assume demand is constant
regardless of the firm’s distribution strategy. This paper
describes a multidisciplinary framework that considers these
interactions in the design of “profit maximizing” distribution
networks. The framework employs two major decision support methodologies:
(1) binary logit models for estimating market share considering
various demand-influencing parameters such as product price and
distribution service, and (2) a mixed-integer programming (MIP)
model for finding optimal distribution network designs. We applied
the framework to an actual design problem facing a national distributor
of industrial chemical products. The test results verify the
framework’s large-scale capability and the potential benefit
of the integrated solution methodology.
Subject Areas: Distribution, Facility Location, Logit
Analysis, Market Area Analysis, and Supply Chain Management. |