Facility Location Problem Using Clistering Algorithm

Abstract

To identify optimum location for facility is one of the major challenges in logistics network. A location for facility is optimum when it can optimize a certain objective such as providing equitable service to customers, minimizing transportation and facility cost, capturing the largest market share, etc. Many decisions for facility location involving distance objective functions on Spherical surface have been approached using heuristic algorithms, branch-and-bound algorithm, approximation algorithms and simulation. The purpose of this study focuses on the design of distribution network of DHL eCommerce in Ho Chi Minh City. Further, it aims to propose the solution of the distribution center (depot) allocation at the logistics service provider DHL eCommerce Vietnam. The potential location proved the reduction of transportation cost in a network design from the current model and also provided insight into considering volume in location analysis as it can serve as a magnifier of business impact. Keywords: Facility Location, Location-allocation, Clustering Algorithm, K-means, Optimization Modeling.