Financially embedded facility location decisions on designing a supply chain structure: A case study

What is it about?

َn economical investment plan of facilities is determined by striking a trade‐off between the contribution of the stockholders’ capital and the loan arrangement. The model also determines the optimum location of plants and the best supply and distribution patterns. The model maximizes the fill rate and the net present value of the periodic cash flow including the sale revenues minus the mortgage payment, purchase, and transportation costs.

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Why is it important?

The facility location problem and its related financial issues have a significant impact on the configuration of a supply chain structure (SCS). Although affording the setup cost of facilities requires a huge financial investment, a meticulous planning to recoup it has been neglected by an overwhelming majority of previous studies. To fill this gap, an economical investment plan of facilities is determined by striking a trade‐off between the contribution of the stockholders’ capital and the loan arrangement.