ABSTRACT
We propose a general planning framework that can be tailored to a wide vari ety of supply chain design problems. To illustrate its potential effectiveness, we tested the framework on a specific design problem facing a leading distributor of chemical products. This entailed a three-step process: (1) an empirical study of its customers’ buying behavior to predict the market share associated with different levels o f distribution service, (2) solving for the optimal distribution network design given the market share estimates obtained in step 1, and (3) conducting a sensitivity analysis of the optimal distribution network design to potential errors in market share estimation. The results of this case study document the superiority of the proposed framework over existing design methodologies. We also illustrate the framework’s potential use as a decision support tool in evaluating alternate pricing strategies. The primary contributions of the research are: (1) the integrated design framework, (2) confirming the large-scale capability of the framework, and (3) validating the potential benefit of the proposed methodology. The research described in this paper represents an ambitious departure from the standard meth ods currently used to analyze and design supply chain networks.
