Designing e‐commerce supply chains: a stochastic facility–location approach

e‐Commerce activity has been increasing during recent years, and this trend is expected to continue in the near future. e‐Commerce practices are subject to uncertainty conditions and high variability in customers’ demands. Considering these characteristics, we propose two facility–location models th...

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Bibliographic Details
Published in:International transactions in operational research Vol. 26; no. 2; pp. 507 - 528
Main Authors: Pagès‐Bernaus, Adela, Ramalhinho, Helena, Juan, Angel A., Calvet, Laura
Format: Journal Article
Language:English
Published: Oxford Blackwell Publishing Ltd 01.03.2019
Subjects:
capacitated facility–location problem
Commerce
Electronic commerce
e‐commerce
Operations research
simheuristics
Site selection
stochastic combinatorial optimization
stochastic programming
Supply chains
supply‐chain management
ISSN:0969-6016, 1475-3995
Online Access:Get full text
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Summary:e‐Commerce activity has been increasing during recent years, and this trend is expected to continue in the near future. e‐Commerce practices are subject to uncertainty conditions and high variability in customers’ demands. Considering these characteristics, we propose two facility–location models that represent alternative distribution policies in e‐commerce (one based on outsourcing and another based on in‐house distribution). These models take into account stochastic demands as well as more than one regular supplier per customer. Two methodologies are then introduced to solve these stochastic versions of the well‐known capacitated facility–location problem. The first is a two‐stage stochastic‐programming approach that uses an exact solver. However, we show that this approach is not appropriate for tackle large‐scale instances due to the computational effort required. Accordingly, we also introduce a “simheuristic” approach that is able to deal with large‐scale instances in short computing times. An extensive set of benchmark instances contribute to illustrate the efficiency of our approach, as well as its potential utility in modern e‐commerce practices.
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ISSN:0969-6016
1475-3995
DOI:10.1111/itor.12433