Accepted Manuscript

Dynamic Dairy Facility Location and Supply Chain Planning under Traffic
Congestion and Demand Uncertainty: A Case Study of Tehran

Javid Jouzdani, Seyed Jafar Sadjadi, Mohammad Fathian

PII: S0307-904X(13)00233-3
DOI: http://dx.doi.org/10.1016/j.apm.2013.03.059
Reference: APM 9422

To appear in: Appl. Math. Modelling

Received Date: 5 April 2012

Revised Date: 20 February 2013
Accepted Date: 24 March 2013

Please cite this article as: J. Jouzdani, S.J. Sadjadi, M. Fathian, Dynamic Dairy Facility Location and Supply Chain
Planning under Traffic Congestion and Demand Uncertainty: A Case Study of Tehran, Appl. Math. Modelling
(2013), doi: http://dx.doi.org/10.1016/j.apm.2013.03.059

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 1
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Dynamic Dairy Facility Location and Supply
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Chain Planning under Traffic Congestion and
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6 Demand Uncertainty: A Case Study of Tehran
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Javid Jouzdani a,1,*, Seyed Jafar Sadjadi a,2, Mohammad Fathian a,3
10 a
11 School of Industrial Engineering, Iran University of Science and Technology, Narmak, Tehran, Iran
12 P.O. Box: 1684613114, Tel: +98(21)77240540-50
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14 javidjouzdani@iust.ac.ir, 2 sjsadjadi@iust.ac.ir, 3 fathian@iust.ac.ir
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Corresponding Author
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 1
2
Dynamic Dairy Facility Location and Supply
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4
Chain Planning under Traffic Congestion and
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6 Demand Uncertainty: A Case Study of Tehran
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10 Abstract
11
12
13 In this paper, dynamic dairy facility location and supply chain planning are studied through
14 minimizing the costs of facility location, traffic congestion and transportation of raw/processed milk
15
16 and dairy products under demand uncertainty. The proposed model dynamically incorporates possible
17 changes in transportation network, facility investment costs, monetary value of time and changes in
18 production process. In addition, the time variation and the demand uncertainty for dairy products in
19
20
each period of the planning horizon is taken into account to determine the optimal facility location
21 and the optimal production volumes. Computational results are presented for the model on a number
22 of test problems. Also, an empirical case study is conducted in order to investigate the dynamic
23 effects of traffic congestion and demand uncertainty on facility location design and total system costs.
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25
26
27 Keywords
28 Dairy supply chain, Traffic congestion, Dynamic supply chain planning, Dynamic location planning,
29
30 Fuzzy mixed-integer programming
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32
33 1 Introduction
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35 Population and income growth along with urbanization are expected to cause a significant increase in
36 demand for animal-origin food products in developing countries in coming years (Delgado et al.
37 1999). Naturally, the increase in demand creates new markets and changes the equilibrium in existing
38
39 ones. The created opportunity attracts capital, which must be invested very carefully especially in the
40 case of dairy industry for several reasons. One important reason is that although the demand is
41 increasing, it is subject to fluctuations which may pose serious problems to the business units in dairy
42
products industry. Decision making becomes more difficult especially when no reliable and accurate
43
44 data is available. In addition, the uncertain changes and fluctuations in demand may be even greater in
45 more rapidly developing countries. For instance, in the past few years, in Ethiopia, new market
46 opportunities which are mostly driven by the growth of dairy supply chains and connect rural
47
48 producers to increasingly profitable markets in Addis Ababa, have emerged in dairy sector
49 (Francesconi et al. 2010).
50
51 In addition, the growth and change in dairy industry also occurs in developed countries in different
52 forms such as trends in milk and other dairy products consumption. As an example, in 2006, the
53
54 consumption of low-fat milk (less than 1% fat) in Sweden was 23.6 kg per person while by 2008 this
55 number was dropped to 20.4 kg. The consumption of total liquid milk followed a similar decline
56 pattern dropping from 133.4 kg to 129.2 kg. By contrast, the demand for cream (with more than 29%
57
fat) increased from 5.4 kg per person in 2006 to 5.9 kg per person in 2008. The total cream
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59 consumption also experienced similar pattern of increase from 9.1 kg to 9.6 kg (Swedish Board of
60 Agriculture 2010).
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 The factors affecting decisions regarding dairy facility location and supply chain planning is not
1 confined to demand. Pressure to improve supply chain performance, which in turn calls for different
2
solutions such as localization, should be considered as an important issue for decision makers of such
3
4 systems. One consequence of this pressure is the rise of arguments in favor of more localization in
5 food supply chains. As the advocates of localization claim, it may be a way to reduce green house gas
6 (GHG) emissions as one of benefits of localization (Darby et al. 2008; Peters et al. 2009). However,
7
8 there is a trade-off between increased localization and food supply costs; i.e., increased localization
9 may influence costs of food supply chains and consequently the consumer should pay a higher price
10 for food (Nicholson et al. 2011). In this regard, although many studies focus on demand-side aspects
11
of food supply localization (King et al. 2010; Toler et al. 2009), very few have addressed the supply
12
13 chain costs. As an example of the latter, one can refer to a recent study (Nicholson et al. 2011) in
14 which a spatial optimization model of the US dairy product supply chain is employed to minimize the
15 total supply chain costs. However, the concurrent consideration of supply chain costs, product
16
17 transportation costs and its effects on traffic congestion is remained to be investigated more
18 thoroughly regarding dairy production. Traffic congestion affects any business involved in road
19 transportation from bio-fuel industry (Bai et al. 2011) to urban freight distribution networks (Figliozzi
20
2011) and even influences the way competitive supply chains behave (Konur and Geunes 2011).
21
22 Since a major portion of the feedstock and products in dairy industry are transported by means of road
23 transportation system, the impact of congestion on the business units in this section is bold and should
24 be addressed carefully to minimize the socio-economic impacts.
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Decisions regarding planning of facility locations and products logistics should be made cautiously in
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28 order to establish a sustainable supply chain. Many researchers have investigated different aspects of
29 facility location and supply chain planning problem and the results of their efforts shed light on
30 different aspects of the problem. Dynamic facility location planning, as a well-known problem, has
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32 been a point of attraction for researchers since Ballou published a paper in late 60s (Ballou 1968) and
33 proposed a model for the dynamic facility location problem considering time-varying parameters. On
34 the other hand, considering demand uncertainty in supply chain models also attracts researchers
35
(Daskin and Owen 1998). In a research by Baker (Talluri and Baker 2002), first the location problem
36
37 and then the corresponding transportation problem is solved applying a multi-stage optimization
38 method. However, concurrent consideration of demand uncertainty in supply chains and facility
39 location for multiple planning periods, as a newer topic, has drawn less attention. Thanh et al. (Thanh
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41 et al. 2008) proposed a mixed-integer model for a multi-level multi-commodity production-
42 distribution system for a multi-period planning horizon considering deterministic demands. In a
43 research by Bidhandi et al. (Bidhandi et al. 2009), an optimization model and its solution method are
44
proposed to solve a facility location and routing problem in which the parameters are deterministic
45
46 and there was a single planning period assuming multiple types of products. Manzini and Bindi
47 (Manzini and Bindi 2009) proposed a linear model in which they considered the costs of production,
48 inventory, and logistics in detail assuming a multi-period planning horizon for a multi-level supply
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50 chain with no uncertainty in demand. A single-period multi-objective location-inventory distribution
51 problem is solved by Liao et al. (Liao et al. 2011a) following an evolutionary approach assuming that
52 the demand is a random variable with a normal distribution. In a recent work by Bai et al. (Bai et al.
53 2011), a multi-level system consisted of biomass producing farms, refineries and fuel pumps is
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55 studied considering costs of facility locations and transportation for a single planning period while
56 incorporating the congestion costs in the deterministic model. Bashiri et al. (Bashiri et al. 2012)
57 proposed a new approach for integrating the strategic and tactical decisions in a supply chain for
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59 multiple strategic and tactical planning horizons. Table 1 presents a brief comparison of the proposed
60 model and previously discussed works considering five modeling aspects. For a more detailed review
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 regarding facility location and supply chain planning problem and a discussion on papers published
1 before 2008, one may refer to a review by Melo et al. (Melo et al. 2009). In addition, the paper
2
authored by Bashiri et al. (Bashiri et al. 2012) may also be cited here for its comprehensive review of
3
4 the literature on different aspects of the problem.
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6 An effort is made to incorporate major practical aspects in the present paper which have not been
7 considered simultaneously in the existing literature. Specifically, our focus is on the factors mentioned
8
in Table 1. For the sake of clarity, multiple products and multiple commodities are differentiated by
9
10 defining these terms. In this research, by multiple products we mean that there are multiple types of
11 products in the whole supply chain. More specifically, we consider raw milk, processed milk and
12 dairy as three types of products flowing between supply chain echelons. We define the case in which
13
14 there are multiple commodities transported from one echelon to another as multiple commodities case.
15 Therefore, according to these definitions, multiple products are modeled in this research; however, for
16 ease in presentation and convenience in explaining the case study, multiple commodities are not
17
included in this research; these may be included following a similar logic.
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19
Table 1. A comparison of some of the recent related works in the literature and our proposed model
20
21 Research MP DU MC CC IR
22 (Thanh et al. 2008)  
23 (Srivastava 2008)  
24 (Bidhandi et al. 2009) 
25 (Manzini and Bindi 2009) 
26 (Sodhi and Tang 2009)    
27 (Zhang et al. 2009)  
28 (Jafari-Eskandari et al. 2010)  
29 (Pan and Nagi 2010)  
30 (Pishvaee and Torabi 2010)  
31 (Paksoy and Chang 2010) 
32 (Rentizelas and Tatsiopoulos 2010)  
33 (Salema et al. 2010)  
34 (Bai et al. 2011) 
35 (Bidhandi and Yusuff 2011) 
36 (Cardona-Valdés et al. 2011) 
37 (Georgiadis et al. 2011)   
38 (Konur and Geunes 2011) 
39 (Le and Lee 2011)  
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(Liao et al. 2011b) 
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(Mirzapour Al-e-hashem et al. 2011)  
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(Wang et al. 2011) 
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(Pishvaee et al. 2011) 
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(Bashiri et al. 2012)   
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(Chen and Fan 2012)  
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(Döyen et al. 2012) 
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(Paksoy et al. 2012)  
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49 (Sadjady and Davoudpour 2012)  
50 Our Proposed Model    
51 Abbreviations: MP: Multiple Periods, DU: Demand Uncertainty, MC: Multiple Commodities,
52 CC: Congestion Costs, IR: Interest Rate
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54 From a strategic perspective, dairy supply chain decision makers face a dynamic problem with several
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decision layers including number and location of facilities (farms, milk processing factories and dairy
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57 manufacturers), capacity/supply/demand allocation and products transportation; each layer has its own
58 aspects: facility investment costs, capacity planning, parameter uncertainty, transportation and traffic
59 congestion costs, changes in road transportation infrastructures (e.g. road construction and
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 expansions), etc. Considering all these, the main contributions of this research are (a) dynamic
1 planning for multi-level supply chain and multi-type facility location, (b) minimization of supply
2
chain design and planning costs considering traffic congestion and (c) demand uncertainty modeling.
3
4
5 The organization of the paper is as follows: In Section 2, fuzzy linear programming (FLP) approach is
6 reviewed. In Section 3, a description of the problem and the proposed conceptual model are provided.
7 Mathematical model formulation is presented in Section 4. In Section 5, some numerical test
8
problems are solved to verify the model. Section 6 discusses a real-world case study and a series of
9
10 sensitivity analyses for Tehran, Iran. Finally, Section 7 concludes the paper and presents guidelines
11 for future research.
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13
14
15 2 Fuzzy Linear Programming Approach
16 In this section some important concepts including a measure of superiority and inferiority of fuzzy
17 variables, used as a basis for the FLP, is reviewed. In the following section, these concepts are used in
18
19 modeling uncertainty in demands parameters, expressed as fuzzy triangular numbers.
20
21 To show the difference between objects, they are compared based on their attributes according to a
22 certain measure. One can claim that object O1 is better than object O2 with respect to a particular
23
24 attribute if the best value of the attribute for O1 is better than the best value of that attribute for O2 .
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26 Based on this idea, Hop defined two comparison measures of superiority and inferiority for fuzzy
numbers (Van Hop 2007). Let U  u  u, r , s  r , s  0 be a set of triangular fuzzy numbers where
27
~ ~
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29 r and s are called the right and the left spreads for each fuzzy variable u~ . Hence, the value of
30 membership function at a point x can be obtained by:
31
32
33   ux
34 max  0,1  r  , if x  u , r  0
35   
1, if a  0 , and / or b  0
 u~ x   
36

max  0,1  u  x  ,
37 (1)
38 if x  u, l  0
39   l 
40 0 , otherwise
41
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43 Triangular fuzzy numbers are quite popular and allow quantification of many different types of
44 information. Specifically, a crisp number u  R can be considered as a triangular fuzzy number with
zero spreads as u  u, 0, 0 .
45
46
47
Theorem 1 (Van Hop 2007): Consider two fuzzy triangular numbers, P  u, a, b  and Q  v, c, d  .
48 ~ ~
49
~ ~ ~ ~
50 If P  Q , then the superiority of Q over P is
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~ ~
 
S Q, P  v  u 
d b
2
(2)
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56 ~ ~
57 and the inferiority of P to Q is
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 a c
1
2
 
I P ,Q  v  u 
2
(3)
3
4 ~ ~
For fuzzy numbers, P and Q , the above theorem presents concepts of inferiority and superiority. By
5
6 using this theorem, it is possible to compare uncertain variables as two sides of a constraint in an
7 optimization model. The uncertainty in demand can be easily captured by means of a triangular fuzzy
8
9
number which in turn provides the bed for use of the above theorem. In other words, the ease of use
10 and applicability of fuzzy linear programming used triangular fuzzy numbers were our main
11 inspirations for utilizing these concepts for modeling the uncertainty in demand for products.
12
13
14
15 3 Problem Description and Modeling
16 In this section, by using concepts of graph theory and network flow models, an overview of the dairy
17
supply chain, studied in this paper, is presented and the conceptual model of the problem is provided.
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19
20 3.1 An Overview
21 This paper is focused on a supply chain aiming to produce processed milk and other dairy products
22 from raw milk. It is assumed that raw milk is transported by trucks to processing factories in which
23
24 the raw milk is pasteurized and homogenized. The processed milk is either transported to
25 manufacturers to produce dairy products or packaged and sent to market. Finally, the dairy products
26 are transported from the manufacturers to the market (see Figure 1).
27
28
29
30 Dairy
31 Manufacturer
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Processed Milk
35 Processing
Dairy Farm
36 Factory
37 Raw Milk Dairy Products
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Processed Milk
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Market
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Figure 1. Conceptual scheme of dairy supply chain
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45
46 3.2 Conceptual Modeling
47 In order to model the problem, let G  V , E  be a graph where V  J  S is the set of nodes and
48
49 E  L  L is the set of edges. The set of nodes, V , is partitioned to two subsets: the set of actual
50 nodes, J , which corresponds to the set of possible locations of facilities, and a set of virtual nodes, S
51
52 , which corresponds to the source and sink nodes for all off the products. The set of edges, E , is also
53 partitioned to two subsets: the set of actual links, L , which corresponds to the set of links between
54 each pair of actual nodes, and the set of virtual links, L , which connects the virtual nodes to the
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actual nodes.
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 1
2
3 Sink Node Processing Raw Milk
4 for Raw Milk Factory Producing
5 Farm
6
7 Demand for
8 Dairy Only
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Source Node Demand for
10
for Processed Processed
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Milk Milk and
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Dairy
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15 Processing Dairy
16 Factory Manufacturer
17 Demand for Demand for
18 Processed Dairy Only
19 Milk Only
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21 Sink Node for
22 Processed
23 Milk
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25
26
27 Raw Milk Dairy Source Node for
28 Producing Farm Manufacturer Dairy
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Figure 2. Conceptual network model of the problem
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31 There are three types of flows in the graph: raw milk flow, processed milk flow and dairy product
32 flow. Raw milk flows from the farm locations (nodes) to processing factories and then flows from
33
34 these nodes to the virtual sink node for raw milk. Processed milk flows from virtual source node to the
35 nodes where there is a processing factory. Passing through the factories, the processed milk then flows
36 to dairy manufacturer nodes or to the nodes with a demand for this product. Finally, processed milk
37
flows from dairy manufacturer nodes to the virtual sink node for processed milk. The flow of dairy
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39 products moves from the virtual source node for dairy products to manufacturer nodes where the
40 flows are guided through the links to the nodes with a demand for dairy products.
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42 In Figure 2, an example of a conceptual network, used to build the model of the problem, is depicted.
43
In this figure, green, red and yellow colors represent raw milk, processed milk and the dairy products,
44
45 respectively; e.g. a red arrow between two nodes shows that there is a processed milk flow between
46 them. The concentric circles with white inner circle show the sink nodes and the color of the ring
47 around the inner circle shows the type of flow it receives. Similarly, the concentric circles with
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49 colored inner circles are the source nodes. The ones with a red inner circle and a yellow ring around it
50 represent demand nodes. Finally, the colored solid circles represent facilities. The solid arrows show
51 the real flow of products and the dashed ones portray the virtual flow from the virtual source nodes to
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the virtual sink nodes. Table 2 provides a concise description of icons and colors in Figure 2.
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Table 2. Description of icons and colors in the conceptual network depicted in Figure 2
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56 Icon / Color Description
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Facility (Farm, Processing Factory, Dairy Manufacturer)
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59 Demand Node (for Processed Milk and/or Dairy Products)
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 Virtual Source Node (for Processed Milk or Dairy Products)
1 Virtual Sink Node (for Raw Milk or Processed Milk)
2
3 Green Raw Milk
4 Red Processed Milk
5 Yellow Dairy Product
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7 In the general form of the problem the location of the farms, processing factories, dairy manufacturers
8
9
and the flows among them should be determined in order to minimize the total costs of facility
10 investment, transportation and traffic congestion. A special case of the problem may be the location
11 planning for a specific type of facility assuming that there are already facilities of other types in the
12 network. As an example, the problem may be reduced to planning for a firm facing some raw milk
13
14 processing factories location and transportation problem when there are some raw milk providers and
15 some dairy manufacturers already active in the network as separate business units.
16
17 3.3 Assumptions
18
19 The appropriate use of realistic and simplifying assumptions is one of the most important aspects of
20 successful modeling of a real-world problem. Considering this fact, the assumptions in this research
21 can be summarized as:
22
23 1) The total number of nodes in the network, candidate raw milk supply nodes, potential
24
25 processing factory nodes, dairy manufacturer locations and demand points are known and
26 fixed.
27 2) Planning horizon is limited; i.e., the total number of planning periods is determined and
28
29
known.
30 3) The flows of multiple products (raw milk, processed milk and dairy) are determined by the
31 model; however, multiple commodities (e.g. several dairy products such as yoghurt, cream,
32 butter, etc.) are not considered.
33
34 4) The fixed facility investment costs for each facility type may vary from node to node and
35 from one planning period to another.
36 5) Facilities are subject to capacity limitations and the capacity of any facility type may differ
37
38
from one planning period to another and from one node to another (e.g. due to regional labor,
39 geographical, etc. conditions).
40 6) Processing factories convert one unit of raw milk to less than a unit of processed milk.
41 Similarly, dairy manufacturers produce less than one unit of product given a unit of processed
42
43 milk. The conversion factors also may differ from one period to another.
44 7) There are nodes in which certain types of facilities already exist. In addition, it might be
45 impossible to locate some certain types of facilities in some nodes (e.g. due to technical,
46
47
geographical, etc. issues).
48 8) Traffic congestion effects of different products are different. This fact is modeled by
49 congestion weight coefficients.
50 9) Each network link has a basic flow which may vary from one planning period to another.
51
52 10) The transportation network infrastructure is time-varying; i.e. the links between each two
53 nodes may either available or unavailable in each planning period.
54 11) All the parameters are certain except the demands. The demand for each product in each node
55
is considered as a fuzzy triangular number.
56
57 12) Due to uncertainty in demand, there may be surplus amount of processed milk or dairy
58 products shipped to a market. Similarly, a demand node may face shortage for processed milk
59 or dairy products. The supply chain incurs both shortage and surplus costs.
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 4 Mathematical Formulation
1
2
In this section the dynamic facility location and supply chain planning under demand uncertainty and
3 traffic congestion is formulated as a non-linear mixed-integer programming. Notations used in the
4 mathematical model are presented in Table 10 of Appendix A.
5

a j t x j t   x j t  1
6
T

 a j 1x j 1  
7
min z   (4)
8
9 jJ \ J1 , J1 t  2 jJ 1  i t 1
10
11 T b j t y j t   y j t  1
12
13
 b j 1y j 1  
jJ \ J 2 , J 2 t  2 jJ 1  i t 1
 (5)

14
15 T c j t z j t   z j t  1
16
17  c j 1z j 1  
jJ \ J 3 , J 3 t  2 jJ 1  i t 1
 (6)
18

 t  f i , j t  i , j  f i , j t 
19
T


20

21
22 t 1 jJ iJ 1  i t 1 (7)
i j
23
24 8 T
25
26  p  t 
k 1 t 1 jJ
k k, j (8)
27
28
29 Subject to
30
31 x j 1  1 j  J1 (9)
32
33
34
y j 1  1 j  J 2 (10)
35
36 z j 1  1 j  J 3 (11)
37

x j T   0
38
39 j  J1 (12)
40
41 y j T   0 j  J 2 (13)
42
43
44 z j T   0 j  J 3 (14)
45

i, j  J , t  1,,T (15)

46
47
48

f i , j t    i , j t  bi , j t   wr f i ,rj t   wm f i ,mj t   wd f i ,dj t  
49
50
d rj t   x j t S j t   y j t  f jr,s t 
j  J , t  1,,T 
51
52
53

  i , j t  f i ,rj t    j ,i t  f jr,i t   0  (16)
iJ
54
d mj t   y j t  f sm, j t   z j t  f jm,s t 
55
56
j  J , t  1,,T 
57
58 
  i , j t  f i ,mj t    j ,i t  f jm,i t   0  (17)
iJ
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65
 1  
S d mj t , D mj t   d mj t   D mj,c t   D mj,rs t  2  1, j t 
~
j  J , t  1,,T  (18)
2

 
S D jm t  , d jm t   D jm ,c t   d jm t   D jm ,rs t  2  2, j t 
3
4 j  J , t  1,,T  (19)
5
6
7
8  
I d mj t , D mj t   d mj t   D mj,c t   D mj,ls t  2  3, j t 
~
j  J , t  1,,T  (20)
9

 
10
11 I D jm t  , d jm t   D jm ,c t   d jm t   D jm ,ls t  2  4, j t  j  J , t  1,,T  (21)
12
13

 
14
15 d dj t   z j t  f sd, j t     i , j t  f i ,dj t    j ,i t  f jd,i t   0 j  J , t  1,,T  (22)
16 iJ
17
18
19
 ~

S d dj t , D dj t   d dj t   D dj ,c t   D dj ,rs t  2  5, j t  j  J , t  1,,T  (23)
20
21
22  
S D dj t  , d dj t   D dj ,c t   d dj t   D dj ,rs t  2  6, j t  j  J , t  1,,T  (24)
23
24
25
 ~

I d dj t , D dj t   d dj t   D dj ,c t   D dj ,ls t  2  7, j t  j  J , t  1,,T  (25)
26
27
28  
I D dj t  , d dj t   D dj ,c t   d dj t   D dj ,ls t  2  8, j t  j  J , t  1,,T  (26)
29
30
31
 m t  f jr,s t   f sm, j t  j  J , t  1,,T  (27)
32
33  d t  f jm,s t   f sd, j t  j  J , t  1,,T  (28)
34
35
36 S j t   C 1j t x j t  j  J , t  1,,T  (29)
37
f sm, j t   C 2j t y j t  j  J , t  1,,T 
38
39 (30)
40
f sd, j t   C 3j t z j t  j  J , t  1,,T 
41
(31)
42
43
44 x j t 1  x j t  j  J , t  2,,T  (32)
45

j  J , t  2,,T 
46
47 y j t 1  y j t  (33)
48
z j t 1  z j t  j  J , t  2,,T 
49
(34)
50
51
52 x j t , y j t , z j t  0,1 j  J , t  1,,T  (35)
53
54
55 Expression (4) consists of two parts: in the first part, the investment cost for the first period is
56 calculated for building farms in locations where it is possible. Considering the time value of money,
57 in the second part, we calculate the investment cost for building farms from the second to the last
58
planning period. By using the single-payment present worth factor defined by equation (36), the time
59
60 value of money is incorporated into the calculations.
61
62
10
63
64
65
 1 P F ; i%; t   1 1  i  ,
t
(36)
2
3 In the above equation, i is the interest rate and t is the number of time periods in the planning
4 horizon (White et al. 1983).
5
6
7 Similarly, equations (5) and (6) represent the investment costs for processing factories and dairy
8 manufacturers, respectively. It should be noted that that by setting a j 1 , b j 1 and c j 1 to
9
10 appropriate values for some specific nodes, the existence of contractor farms, factories and
11 manufacturers at the beginning of the planning horizon can be modeled. To be more specific, these
12 are considered as separate facilities and they do not belong to the firm facing the decision problem of
13
14
dynamic facility and supply chain planning; therefore, instead of investment costs for building
15 facilities, contract costs should be incorporated.
16
17 The traffic congestion costs are calculated in (7) in which the BPR (US Bureau of Public Roads) link
18 performance function,
19
20
21
22
 
 i , j  f i , j    i0, j 1 0.15 f i , j Ci , j  , (37)
23
24 is used. In the above equation,  is a parameter,  i0, j and Ci , j are the free flow travel time and the
25
26 traffic capacity of roadway link from node i to node j , respectively (Sheffi 1985). It should be noted
27
that according to a recent research, it is possible to construct instances where total route distance or
28
29 duration increases but emissions decrease (Figliozzi 2011); therefore, in this research, by minimizing
30 the congestion costs in terms of travel time, we do not focus on minimizing the total emission of
31 GHG. Obviously, one may choose the minimization of emissions by replacing the corresponding part
32
33 of the objective function with an appropriate emission function such as the one developed by
34 Transport Research Laboratory for heavy duty trucks (Hickman 1999). In this research, the monetary
35 value of time,  t  , is considered as a function of time meaning that the monetary value of time may
36
37 change from one period to another. Using the value of time in each period and the single-payment
38 present worth factor, the time spent on links – which is highly dependent on traffic congestion – can
39
be converted to present value of traffic congestion cost for any time period t . The expression in (8) is
40
41 related to constraints (18)-(21) and (23)-(26) and will be explained later in what follows.
42
43 Constraints (9)-(11) determine the locations where there already exists a facility while constraints
44 (12)-(14) define the nodes in which no facility (of a specific type) can be opened. For example, this is
45
46
useful in modeling a situation in which a node is placed in a downtown area where no factories are
47 allowed to be built.
48
49 In constraint (15), total flow for link from node i to node j is calculated according to the weight of
50
51
each material flow type. By defining the appropriate weights, different types of flow can be expressed
52 in terms of passenger cars and therefore can be added to the basic traffic flow of a link. For example a
53 truck may have the traffic congestion effect of 5 passenger cars when transporting raw milk in a link;
54
55 then its corresponding weight, wr , would be equal to 5 in the model.
56
57 Constraint (16) ensures the model consistency regarding the raw milk input and output flows by
58 setting the difference between the raw milk input and output flows to 0 for all nodes and all time
59
60 periods. By this constraint, we mean that the amount of raw milk flowing into a node plus the amount
61
62
11
63
64
65
 it creates (in the case that a farm exists in that node) equals the amount of raw milk flowing out plus
1 the amount used by the factory in that node (in the case that a factory exists in that node). Similarly,
constraint (17) defines d mj t  as the difference between the processed milk input and output flows.
2
3
4 There is a difference between constraint (16) and (17) and that is due to the fuzziness of processed
5
6 milk demand. In our model, the processed milk demand for each node j in each time period t is
7 considered as a triangular fuzzy number, given by
8
9
10
11
~
 
D mj t   D mj,c t , D mj,rs t , D mj,ls t  . (38)
12
13 When comparing a fuzzy number like the one in equation (38) with a crisp value such as
14
15
 
d mj t   d mj t ,0,0 , by using Theorem 1, superiority of d mj t  over D mj t  is
~

16
17
18  ~

S d mj t , D mj t   d mj t   D mj,c t   D mj,rs t  2 . (39)
19
Similarly, the superiority of D j t  over d mj t  , the inferiority of D j t  to d mj t  and the inferiority
20 m ~ ~m
21
of d mj t  to D j t  can be obtained. Considering the above discussion about D j t  and d mj t  , it
22 m~ m ~
23
24 should be clear that constraint (17) along with constraint (18)-(21) calculate the four types of
25 uncertain differences between these numbers where the differences are represented by
k , j t , k  1,2,3,4, j  J , t  1,,T . The differences are minimized by adding a proportional
26
27
penalty, pk , k  1,2,3,4 , to the objective function. Therefore, constraints (17)-(21) ensure that the
28
29
30 amount of processed milk that flows into a node plus the amount it creates (in the case that a factory
31 exists in that node) equals the amount of processed milk that flows out plus the uncertain amount that
32
33 is demanded by that node plus the amount that is used by the manufacturer in that node (in the case
34 that a factory exists in that node). Constraints (22)-(26) respectively act similar to constraints (17)-
35 (21) with the difference that former constraints ensure the consistency of dairy products flows in the
36
network; i.e. constraints (22)-(26) are used to ensure that the amounts of dairy products flowing into a
37
38 node plus the amount it creates (in the case that a manufacturer exists in that node) equals the amount
39 flowing out plus the uncertain amount demanded by that node.
40
41 Constraint (27) models the conversion process characteristic of the factories in each time period t . To
be more specific, only a portion of the raw milk, say  m t  , that flows through a facility is converted
42
43
44
to processed milk. It is worth noting that  m t  is function of time; i.e. the model is flexible enough
45
46 to capture the changes in these parameters by assigning different values to  m t  for different values
47
48 of t . The same argument is valid for constraint (28) which models the corresponding characteristics
49 of the manufacturers in each time period t .
50
51 In constraint (29), the limit for maximum raw milk production capacity of a potential farm at location
j at time period is formulated. Similar to  m t  , S j t  is a function of time for each node j . This
52
53
54
enables us to model the possible changes in the amount of raw milk that a farm can produce in a
55
56 location j in different time periods t . The change may have different sources from technological
57 advances to economic changes that may affect the output of the farms. Constraints (30)-(31) express
58
59 similar concepts for processing factories and dairy manufacturers.
60
61
62
12
63
64
65
 Constraints (32)-(34) model the fact that if a facility is built in a location in a time period, in future
1 time periods it should still exist. These constraints along with constraints (9)-(14) guarantee that if a
2
facility exists in a node in the first planning period, it remains so to the end of the planning horizon;
3
4 similarly, if a specific type of facility cannot be built in a location in a time period, it should never be
5 built at that location. It worth noticing that, replacing for example x j T   0 by x j t   0 for some
6
7 t  1, , T  1 means a farm cannot be build in location j sooner than time period t . Finally,
8
9 constraint (35) defines the decision variables as 0-1 integer variables. The binary constraint may be
10 replaced by positive integer constraint without loss of model validity assuming that the integer
11 variable represents the number of facilities in a location.
12
13
14
15 5 Numerical Test Problems
16 In this section, a set of test problems are solved to verify the proposed model. The model is tested by
17
using three test problems: (i) a small network with 6 nodes shown in Figure 3, (ii) the Sioux-Falls
18
19 network (Bar-Gera 2011) illustrated in Figure 4-(a) and (iii) the Anaheim network (Bar-Gera 2011)
20 depicted in Figure 4-(b).
21
22
23 2 4
24
25
26
27 1 6
28
29
30
31 3 5
32
33
34 Figure 3. A 6-node network
35
36
37
3
38 1 2
1
39 2 5 4 14
40 8 11 15
3 4 5 6
41 6 9 12
13 23 16 19
42
21 17
43 7 35 10 31 9 8 7
24 20
44 25 26 22 47 18 54
33 27 55
45 48
12 11 10 16 18
46 36 32 29 50
51 49 52
47 30
48 34 40 28 43 17

49 53 58
50 41 56 60
57
51 37 38 14 15 19
44 45
52 42 71 46 67
72
53 23 22 59 61
54 70
63
55 73 76 69 65 68

56 74 66 62
13 24 21 20
57 39 75 64
58 (a) (b)
59 Figure 4. (a) The Sioux-Falls network and (b) The Anaheim network
60
61
62
13
63
64
65
 All the problems are coded into LINGO Software and run on a desktop computer equipped with
1 Intel® Core™2 Duo CPU T8300 at 2.40GHz and 2.00 GB of RAM running Microsoft® Windows
2
Vista™. To show how the model works, the 6-node network is investigated in details. The 6-node
3
4 network problem is solved considering the data provided in Table 11 of Appendix A. It is assumed
5 that the link between node 1 and node 2 in this network does not exist in the first time period and the
6 link is created and made available in time period 2. The results are presented in Figure 5 in which for
7
8 each time period, the facilities in each node are illustrated. In the first time period, based on the node
9 in the sets J k and J k for each k  1,2,3 , there may already be some facilities in the network. In
10
11 this example, there is already a factory in node 3 and a farm in node 4. In addition, no manufacturers
12 may be active in nodes 1 and 3. Furthermore, no farms can be built in node 2 and no factory may be
13 operating in node 1.
14
15
16 Base on the results, although the facilities are similar for t  3 and t  4 , the flows differ due to
17 change in the demands for processed milk and dairy products. In the model, it is assumed that each
18 node satisfies its demand (partially or wholly) if there are any facilities in that node capable of doing
19
so. To see how the demands are satisfied and for the sake of clearance, Table 3, Table 4 and Table 5
20
21 show the values for some of the decision variables resulted from solving the model for the 6-node
22 network. Similar results are obtained for larger-sized networks. A summary of the results for the three
23 networks is presented in Table 6.
24
25
In the experiments, we assume high penalty coefficients for the deviations in demands (
26
27 pk  10, k  1, ,8 ) and small right and left spreads for fuzzy triangular demands ( ls  rs  1 )
28
29 where ls and rs are the left and the right spreads of the fuzzy triangular parameter, respectively. This
30 leads to results in which we have k , j t   0, k , j, t showing that no deviations are realized. By
31
32 lowering the penalty and/or increasing the spreads, different results are obtained in which the non-
33 zero deviations are observed. The penalties should be determined and adjusted by the decision makers'
34 according to the relative importance of the deviations. In addition, analyses show that by increasing
35
36 the value of time, the facilities are located in a way that each node is supplied by its own facilities; i.e.
37 due to the increase in congestion costs, the products are preferred to be consumed in the nodes in
38 which they are produced. To be more specific, setting  1  10 ,  2  11 ,  3  18.5 and
39
40  4  26.5 leads to a solution in which each node is supplied by its own farm and therefore, there
41
42 exist no raw milk flow from one node to another.
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
14
63
64
65
 Manufacturer Manufacturer
Manufacturer Farm Manufacturer Farm
1 Factory Factory Factory Factory
2 2 4
2 4
3
4
5
6
7
8
1
t =1 6 1
t =2 6

Factory
Factory Farm
9 Farm Manufacturer
10
3 5 3 5
11
12 Factory Factory Factory
13 Farm
Manufacturer
14
15 Manufacturer Manufacturer
Manufacturer Farm Manufacturer Farm
16 Factory Factory Factory Factory
17
2 4 2 4
18
19
20
21
22
23
1
t =3 6 1
t =4 6

Factory Factory
24 Farm Farm
25 Manufacturer Manufacturer
26 3 5 3 5
27 Factory Factory Factory Factory
28 Farm Farm Farm
29 Manufacturer Manufacturer
30
31
32 Figure 5. The illustration of the results for the 6-node network for each time period
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
15
63
64
65
 1
2
3
4
5
6 Table 3. Raw milk results
7
Raw milk supply Raw milk flow
8 Node 1 Node 2 Node 3 Node 4 Node 5 Node 6
9 Time periods Time periods Time periods Time periods Time periods Time periods Time periods
10 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
11 Node 1 0 0 0 0 - - - - 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
12 Node 2 0 0 0 0 0 0 0 0 - - - - 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Node 3 0 0 0 23.17 0 0 0 0 0 0 0 0 - - - - 0 0 0 0 0 0 0 0 0 0 0 0
13
Node 4 50.00 30.17 22.81 14.51 0 0 0 0 15.20 0 0 0 0 0 0 0 - - - - 1.79 0 0 0 0 0 0 0
14 Node 5 0 33.00 34.19 19.88 0 0 0 0 13.73 0 2.61 0 0 0 0 0 0 0 0 0 - - - - 0 0 0 0
15 Node 6 44.94 33.00 31.58 31.58 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 11.93 0 0 0 - - - -
16
17
18 Table 4. Processed milk results
19
20 Processed milk flow
Node 1 Node 2 Node 3 Node 4 Node 5 Node 6
21 Time periods Time periods Time periods Time periods Time periods Time periods
22 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
23 Node 1 - - - - 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
24 Node 2 12.93 0 13.26 0 - - - - 6.45 6.65 0 0 0 0 0 0 0 0 0 0 0 0 0 0
25 Node 3 12.57 20.42 7.24 15.50 0 0 0 6.51 - - - - 0 0 0 0 0 0 0 0 0 0 0 0
26 Node 4 0 0 0 0 0 0.15 0 0 0 0 0 0 - - - - 3.64 0 0 0 0 0 0 0
Node 5 0 0 0 0 0 6.57 10.78 0 6.12 13.77 7.24 0 0 0 0 0 - - - - 0 0 0 0
27 Node 6 0 0 0 0 0 0 0 0 0 0 0 0 1.72 0 0 0 2.48 0 0 0 - - - -
28
29
30
Table 5. Dairy products results
31
32 Dairy products flow
33 Node 1 Node 2 Node 3 Node 4 Node 5 Node 6
Time periods Time periods Time periods Time periods Time periods Time periods
34
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
35 Node 1 - - - - 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
36 Node 2 7.73 20.50 7.22 20.26 - - - - 0 0 6.58 0 0 0 0 0 0 0 0 0 0 0 0 0
37 Node 3 7.77 0 13.27 5.24 0 0 0 0 - - - - 0 0 0 0 0 0 0 0 0 0 0 0
38 Node 4 0 0 0 0 1.73 13.58 13.81 7.14 0 0 0 0 - - - - 8.86 3.64 0 0 14.41 7.08 6.78 5.96
39 Node 5 0 0 0 0 0 6.92 0 6.94 7.77 0 6.69 5.24 0 0 0 0 - - - - 1.08 5.14 4.69 5.76
Node 6 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 - - - -
40
41
42
43
44
45
46
47 16
48
49
 1
2
3
4
5
6 As can be seen in Table 6, the solution method applied by LINGO Software is not capable of obtaining
7
the optimal solution for large scale problems like Anaheim Network instance. The process is terminated
8
9 after 10 hours of running and the gap between the best objective function value and the lower bound is
10 about 16%. This calls for development of a meta-heuristic approach to tackle this problem; as mentioned
11 in the conclusion section, this may be a future contribution.
12
13 Table 6. Summary of results for the three networks
14
15 Obj. Function
Network Name Number of nodes Number of time periods CPU time (hh:mm:ss)
16 Value
17 6-node network 6 4 00:12:16 12598360
18 Sioux-Falls network 24 4 02:34:15 82641820
19 Anaheim Network 416 4 N/A N/A
20
21
22
23 6 Case study
24 Tehran, the capital province of Iran, is one of the most populated areas in the country with a population
25 over 8 million (Tehran City Hall 2010a). The daytime population of Tehran is significantly larger than
26
27 that of nighttime because many suburban people, working in downtown Tehran, have to travel everyday
28 from work to home and vice-versa. This translates to more than 15 million commutes per day (Tehran
29 City Hall 2010b). The metro in Tehran is developing; however, it still gains a small share of 4.5% in
30
31 public transportation leaving the rest for road public transportation system that has a share of 45%
32 (Tehran City Hall 2010b). It can be inferred that more than half of the passengers in Tehran use personal
33 vehicles for their commutes. With the large and growing number of vehicles, protracted traffic jams and
34 air pollution are common phenomena both of which increase the environmental, social, industrial and
35
36 personal costs.
37
38 In addition, to the number of passenger vehicles should be added the number of commercial vehicles
39 transporting goods or providing services for their customers. Many goods, including food products, are
40 transported to the retailers and customers mainly by using the road transportation system. Satisfying the
41
42 demand of so many people requires a massive transportation of goods. By Tehran road transportation
43 system being pushed to its capacity limits, considering congestion in facility location and supply chain
44 planning is a must.
45
46
We focus on the milk and other dairy products for which the demand is about 90kg per capital per year.
47
48 The consumption of these products is increasing every year not only because of the population growth
49 and welfare improvements but also because of the government health and food programs. As an example,
50 the production of raw milk in the country soared from 1.6 million tons in 2002 to 2.4 million tons in 2006
51
52 (Iran Statistics Center 2006). The increasing demand is uncertain and depends on many factors. From a
53 supplier point of view, milk and many dairy products should be transported to the retailers by using
54 refrigerated vehicles on a daily (or at most weekly) basis. In addition, the decision makers should take
55
into account the future changes in demand, transportation infrastructures, traffic volume, etc. especially in
56
57 case of Tehran.
58
59 Considering all the facts mentioned above, it can be concluded that milk and dairy products supply chain
60 and facility location planning under congestion and demand uncertainty is a significantly important
61
62
17
63
64
65
 1
2
3
4
5
6 problem the solution to which may affect both the road transportation system and the business units
7
involved in dairy industry.
8
9
10 The data required for this case are gathered from different sources. The investment costs and production
11 capacities of facilities and other data related to dairy industry are obtained from feasibility studies
12 provided by the ministry of cooperatives (Bank Loans and Economic Affairs Office 2006). The data
13
14
regarding the uncertain demand are estimated based on the population of each node for which the data are
15 provided by the Iran Statistical Center and reported by Tehran City Hall (Tehran City Hall 2010a). The
16 traffic capacity, traffic flow, free flow time and other transportation-related data are obtained and/or
17 calculated based on reports provided by Tehran City Hall (Tehran City Hall 2010b). The interest rate is
18
19 also provided by the Iran Statistics Center. The assumptions under which the results are obtained are
20 provided in what follows.
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
Figure 6. Tehran map and the problem network (Gitashenasi 2009)
45
46 It is assumed that in the vicinity of Tehran city including 22 nodes representing 22 urban zones, no
47 facilities can be located. Each node outside the city territories can be the location of at most 3 farms, 2
48
49 pasteurized milk factories and 1 dairy products manufacturer facility. The map of Tehran and the problem
50 network are presented in Figure 6. In this figure, the links between the urban zones, i.e., nodes 1 to node
51 22, are fully depicted but all the links between other nodes, i.e., those with a label greater than 22, are not
52
53
displayed for the sake of simplicity and clarity of the figure; however, in solving the mathematical model,
54 these nodes are assumed to be connected.
55
56 Table 7. facility Locations for the 3 periods of the planning horizon
57
Farm Factory Manufact.
58 Node
59 1 2 3 1 2 3 1 2 3
60 1 0 0 0 0 0 0 0 0 0
61
62
18
63
64
65
 1
2
3
4
5
6 2 0 0 0 0 0 0 0 0 0
7
8          
9 22 0 0 0 0 0 0 0 0 0
10 23 3 3 3 1 1 1 1 1 1
11 24 3 3 3 1 1 1 2 2 2
12 25 1 1 2 1 1 1 0 0 0
13 3 3 3 1 1 1 2 2 2
26
14
15 27 0 0 0 1 1 1 1 2 2
16 28 0 0 0 0 0 0 0 0 0
17 29 0 0 0 1 1 1 0 0 0
18 30 0 0 0 0 0 0 0 0 0
19 31 0 0 0 0 0 0 0 0 0
20
21
22 The planning horizon is consisted of 3 years from 2012 to 2015 and all parameters of the model are
23 subject to change during this period. In addition, all general assumptions of the model are preserved.
24 Table 7 shows the results for facility locations obtained by using LINGO software. In this table, the
25
26
numbers in column headers are the number of periods and the numbers in the first column are the number
27 of nodes. It is noticeable that in node 25 (Damavand) the number of farms is equal to 1 for the first period
28 and is increased to 2 for the last period. Similarly, the number of manufacturers in node 27 (Rey) is
29 increased from 1 in the first period to 2 in the second period. The increase in the number of facilities is a
30
31 result of increase in the demands and shows that the effects of parameters dynamics on the solution.
32
33 Table 8. Flow of raw milk between nodes
34 Variable Period 1 Period 2 Period 3
35
RAWFLOW( 15, 20) 1297.7 2833.3 2618.6
36
37 RAWFLOW( 20, 27) 1297.7 2833.3 2618.6
38 RAWFLOW( 23, 27) 3965.5 2375.0 2536.1
39 RAWFLOW( 23, 29) 0 1416.7 1309.3
40 RAWFLOW( 24, 15) 1297.7 2833.3 2618.6
41 RAWFLOW( 24, 25) 0 587.6 101.1
42
RAWFLOW( 26, 23) 228.6 0 0
43
44 RAWFLOW( 26, 29) 3508.2 3791.7 3845.4
45
46 Table 8 presents the results for the amount of raw milk transported between nodes for each period where
RAWFLOW i, j  is the flow of raw milk from node i to node j . In this table, only non-zero values are
47
48
49 depicted for the sake of readability. The effects of parameter dynamics on the results are more obvious
50 when considering material flows between links in Table 8. For example, no raw milk is transported from
51
52 node 26 to node 23 for second and third periods and the opposite happens for the flow from node 24 to 25
53 where no raw milk is transported for the first period of the planning horizon. Similarly, the amount of
54 processed milk and dairy products transported between nodes are presented in Table 9 in which
MILKFLOW i, j  and DAIRYFLOW i, j  are the flow of processed milk and the flow of dairy
55
56
57 products from node i to node j , respectively.
58
59
60
61
62
19
63
64
65
 1
2
3
4
5
6 Table 9. Dairy products and processed milk flows between nodes for each period
7
Variable Period 1 Period 2 Period 3 Variable Period 1 Period 2 Period 3
8
9 MILKFLOW( 1, 28) 47.2 51.5 56.1 DAIRYFLOW( 1, 28) 47.2 51.5 56.1
10 MILKFLOW( 2, 1) 127.7 486.5 0 DAIRYFLOW( 2, 1) 9.8 9.8 0
11 MILKFLOW( 2, 3) 127.7 486.5 0 DAIRYFLOW( 3, 1) 433.3 367.2 534.1
12 MILKFLOW( 3, 1) 315.4 0 0 DAIRYFLOW( 5, 22) 45.3 49.3 52.8
13 MILKFLOW( 4, 1) 0 0 534.1 DAIRYFLOW( 6, 3) 759.8 121.7 0
14 MILKFLOW( 4, 3) 0 0 250.6 DAIRYFLOW( 7, 3) 0 604.2 928.2
15
16 MILKFLOW( 4, 7) 0 0 1343.7 DAIRYFLOW( 7, 4) 879.0 966.4 1062.6
17 MILKFLOW( 4, 8) 0 381.2 593.9 DAIRYFLOW( 7, 6) 0 0 302.0
18 MILKFLOW( 5, 22) 44.8 48.6 52.6 DAIRYFLOW( 7, 8) 149.7 163.1 238.9
19 MILKFLOW( 7, 3) 152.2 0 143.4 DAIRYFLOW( 9, 2) 642.9 815.2 662.0
20 MILKFLOW( 7, 4) 90.4 0 0 DAIRYFLOW( 9, 5) 753.3 827.6 908.4
21 MILKFLOW( 7, 6) 0 0 304.7 DAIRYFLOW( 9, 10) 283.3 14.4 0
22
23
MILKFLOW( 7, 8) 377.6 0.2 0 DAIRYFLOW( 10, 2) 0 0 103.0
24 MILKFLOW( 7, 12) 0 0 295.1 DAIRYFLOW( 11, 6) 292.2 0 1.3
25 MILKFLOW( 7, 13) 0 0 209.6 DAIRYFLOW( 11, 10) 51.2 125.9 206.0
26 MILKFLOW( 8, 13) 0 0 116.2 DAIRYFLOW( 12, 6) 720.3 399.1 1.3
27 MILKFLOW( 9, 2) 1250.5 1541.1 765.0 DAIRYFLOW( 12, 7) 1352.7 2089.5 2922.6
28 MILKFLOW( 9, 5) 752.8 826.9 908.2 DAIRYFLOW( 12, 13) 400.6 449.7 468.1
29
MILKFLOW( 9, 10) 0 367.5 367.5 DAIRYFLOW( 13, 8) 246.0 271.6 238.9
30
31 MILKFLOW( 11, 6) 230.6 0 0 DAIRYFLOW( 14, 13) 115.4 118.5 96.5
32 MILKFLOW( 11, 10) 334.5 0 0 DAIRYFLOW( 15, 12) 1308.1 3226.4 3708.3
33 MILKFLOW( 12, 6) 22.1 277.4 0 DAIRYFLOW( 15, 14) 687.9 747.8 788.2
34 MILKFLOW( 12, 7) 944.2 356.1 0 DAIRYFLOW( 16, 11) 633.2 444.2 556.8
35 MILKFLOW( 12, 13) 288.2 350.0 0 DAIRYFLOW( 16, 12) 1427.8 0 0
36
MILKFLOW( 12, 14) 0 12.0 0 DAIRYFLOW( 16, 17) 78.6 527.4 338.0
37
38 MILKFLOW( 13, 8) 18.1 53.4 0 DAIRYFLOW( 17, 10) 0 227.1 300.7
39 MILKFLOW( 15, 14) 572.5 617.2 691.7 DAIRYFLOW( 18, 9) 1848.7 1842.8 1774.1
40 MILKFLOW( 16, 11) 854.9 318.3 349.6 DAIRYFLOW( 18, 17) 194.9 0 0
41 MILKFLOW( 16, 12) 1516.8 1283.5 21.2 DAIRYFLOW( 18, 21) 247.2 271.5 299.1
42 MILKFLOW( 16, 15) 0 0.2 0 DAIRYFLOW( 19, 17) 0 0 292.6
43 MILKFLOW( 16, 17) 191.6 0 0 DAIRYFLOW( 20, 15) 0 2184.7 2681.9
44
45
46
47 20
48
49
 1
2
3
4
5
6 MILKFLOW( 18, 9) 2172.5 2921.0 2280.5 DAIRYFLOW( 20, 16) 1231.9 171.7 506.0
7 MILKFLOW( 18, 17) 0 300.3 329.9 DAIRYFLOW( 21, 22) 72.9 80.3 89.2
8 MILKFLOW( 18, 21) 247.7 272.2 299.3 DAIRYFLOW( 23, 16) 1237.8 1162.6 787.3
9
MILKFLOW( 19, 17) 81.9 0 0 DAIRYFLOW( 23, 19) 262.4 288.2 609.1
10
11 MILKFLOW( 20, 15) 1251.0 1362.8 1511.6 DAIRYFLOW( 24, 15) 2674.5 2535.2 2634.5
12 MILKFLOW( 20, 16) 959.6 0 0 DAIRYFLOW( 24, 25) 113.1 123.9 135.8
13 MILKFLOW( 21, 22) 73.4 81.0 89.5 DAIRYFLOW( 24, 30) 48.3 52.6 57.4
14 MILKFLOW( 23, 16) 1933.7 1964.6 769.2 DAIRYFLOW( 24, 31) 603.3 663.2 729.0
15 MILKFLOW( 23, 19) 344.3 288.2 316.5 DAIRYFLOW( 26, 18) 2628.0 2484.8 2480.2
16
MILKFLOW( 23, 20) 0 0.2 1136.7 DAIRYFLOW( 26, 29) 575.3 632.3 695.1
17
18 MILKFLOW( 24, 31) 603.3 663.2 448.1 DAIRYFLOW( 27, 20) 1571.7 2729.7 3597.9
19 MILKFLOW( 25, 4) 788.6 1347.6 3784.9
20 MILKFLOW( 25, 30) 48.3 52.6 57.4
21 MILKFLOW( 27, 20) 2550.3 1735.9 784.9
22 MILKFLOW( 29, 18) 2757.5 3864.0 3316.8
23 MILKFLOW( 29, 26) 0 0 172.5
24
25 MILKFLOW( 29, 27) 0 503.6 534.8
26 MILKFLOW( 29, 31) 0 0 280.9
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47 21
48
49
 1
2
3
4 7 Conclusions and Future Works
5 In this paper, dynamic dairy facility location and supply chain planning were discussed and concurrent optimization of
6 facility location and total transportation costs considering the traffic congestion and demand uncertainty were
7
8 investigated. The proposed model was verified by numerical examples. The analyses of the results from the numerical
9 examples showed the flexibility of the model in capturing the features of real-world problems. The model was shown to
10 be capable of determining the location of facilities and supply product volumes flown in the network – considering the
11
12
changes in parameters – to satisfy the uncertain demands. This can also be verified by the results from the case study. The
13 results from Tehran case showed that the changes in the model parameters during the periods of the planning horizon
14 significantly affect the decisions regarding the location and supply chain planning.
15
16 Considering the uncertainty and time-variability in other parameters of the model can be a subject for future researches
17
18
(e.g. the interest rate or the flow weights). In this paper, the dairy products were considered as a single final product;
19 designing a model for the problem with multiple commodities could be an interesting subject of investigation. Another
20 type of uncertainty is also imaginable; more specifically, stochastic parameters may be utilized to capture a different
21 aspect of uncertainty. One may also think of fuzzy stochastic variables in the problem. Furthermore, the uncertainty may
22
23 be considered in other parameters of the model (e.g. the interest rate). Taking into account other features of real-world
24 problems such as inventory issues for multiple items and studying the interactions between the parameters (Sharma
25 2007a; Sharma 2007b; Sharma 2009b; Sharma 2009d) could also be subjects of further studies in which either already
26
27
designed methods (e.g. (Sharma 2008; Sharma 2009a; Sharma 2009c)) or new ones may be utilized and the
28 parameters/situations of these papers may be adjusted/modified in the context of present work to incorporate the related
29 business environment of dairy products. Furthermore, investigation of the behavior of demand for other food products
30 (Sharma and Lote, 2013) may provide insights regarding the nature of demand for milk and other dairy products for future
31
32 studies. In addition, facility location problem is known to be NP-Hard and is solved as a part of our model. Therefore, for
33 networks of large size, the need for designing new efficient meta-heuristic algorithms or modifying known efficient ones
34 (e.g. teaching-learning-based optimization algorithm (Rao et al. 2012)) may speed up the process of finding a solution. To
35
36
be more specific, we neither discussed nor developed a solution method; i.e., our focus was on modeling and concepts.
37 However, developing a problem-specific heuristic solution method may be a contribution to optimization of large-scale
38 instances of the problem as future works.
39
40
41
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Appendix A
4 The notations used in the mathematical formulation of the model are presented in Table 10. Table 11 provides the data
5 based on which the problem is solved for the 6-node network example.
6
7 Table 10. Notations descriptions
8 Notation Description
9
10 J The set of all actual nodes
11 J1 The set of locations where a farm already exists at the beginning of the planning period
12
13 J 1 The set of locations where no farms can exist
14 The set of locations where a processing factory already exists at the beginning of the planning period
15
J2
16 J 2 The set of locations where no processing factories can exist
17 The set of locations where a dairy manufacturer already exists at the beginning of the planning period
18
J3
19 J 3 The set of locations where no dairy manufacturers can exist
20
21 T The planning horizon
22 i The interest rate
23 a j t  The investment cost of building a farm at location j in time period t
b j t 
24
25
The investment cost of building a processing factory at location j in time period t
26 c j t  The investment cost of building a dairy manufacturer at location j in time period t
27
28 x j t  A 0-1 integer decision variable that is 1 if a farm is built at location j in time period t and is 0 otherwise
y j t 
29
A 0-1 integer decision variable that is 1 if a processing factory is built at location j in time period t and
30
31 is 0 otherwise
32 z j t  A 0-1 integer decision variable that is 1 if a dairy manufacturer is built at location j in time period t and
33 is 0 otherwise
34
pk Violation penalty of constraint k
35
36 k , j t  Superiority/inferiority in constraint k for node j in time period t

37
38 t Value of time at time period t
39 f i, j t  Total flow from node i to node j
40
41  i, j t  A 0-1 parameter that is 1 if there exists a link between node i to node j and is 0 otherwise
 i, j  f 
42
The travel time for the link from node i to node j when a flow of f passes through the link
43
44 bi, j t  The base traffic for the link from node i to node j at time period t
45
46 wr The weight parameter for the raw milk flow
47 wm The weight parameter for the processed milk flow
48
49 wd The weight parameter for the dairy flow
f i,rj t 
50 The raw milk flow from node i to node j at time period t
51
52 f i,mj t  The processed milk flow from node i to node j at time period t
53
54 f i,dj t  The dairy flow from node i to node j at time period t
55
56 d rj t  The difference between the raw milk input and output flows of node j at time period t
S j t 
57
The amount of raw milk supply by node j at time period t
58
59 f j,r s t  The raw milk flow from node j to the sink node for raw milk at time period t
60
61
62
26
63
64
65
 1
d mj t 
2 The difference between the processed milk input and output flows for node j at time period t
3
4 f s,mj t  The processed milk flow the source node for processed milk to node j at time period t
5
6 f j,ms t  The processed milk flow node j to the sink node for processed milk at time period t
7
D mj t 
~ The processed milk demand (as a triangular fuzzy number) at node j at time period t
8
D mj,c t 
9
The center of processed milk demand (as a triangular fuzzy number) at node j at time period t
10
11
12
D mj,rs t  The right spread of processed milk demand (as a triangular fuzzy number) at node at time period
13 D mj,ls t  The left spread of processed milk demand (as a triangular fuzzy number) at node j at time period t
14
D dj t 
15
~ The dairy demand (as a triangular fuzzy number) at node j at time period t
16
17 D dj ,c t  The center of dairy demand (as a triangular fuzzy number) at node j at time period t

D dj ,rs t 
18 The right spread of dairy demand (as a triangular fuzzy number) at node j at time period t
19
20 D dj ,ls t  The left spread of dairy demand (as a triangular fuzzy number) at node j at time period t
21
22  m t  The efficiency of processing factories at time period t
 d t 
23
The efficiency of dairy manufacturers at time period t
24
25 C 1j t  Potential raw milk production capacity of a farm at location j at time period t
26
27 C 2j t  Potential processed milk production capacity of a processing factory at location j at time period t

C 3j t 
28
29 Potential dairy production capacity of a dairy manufacturer at location j at time period t
30
31 Table 11. 6-node network data
32 Assumptions about the data
33 T 4  m t   0.9, t  1,2
34
35 a j t   100, j  J , t  1, , T   m t   0.95, t  3,4
b j t   270, j  J , t  1,, T   d t   0.9, t  1,2
36
37
38 c j t   350, j  J , t  1,,T   d t   0.95, t  3,4
39
40 D mj 1  25,1,1, j  1,6
~ bi , j t  5,9, i, j  J , t  1,,T 
41
D mj t   20,1,1, j  1,6, t  2,3  i0, j  50, i, j  J , t  1,,T  i , j t   1
~
42

D mj 4  15,1,1, j  1,6 Ci , j  30, i, j  J , t  1,, T  i , j t   1

43 ~
44
D mj t   0,0,0, j  1,6, t  2,3
45 ~ wr  wm  wd  5
46
47
48 D dj 1  15,1,1, j  1,6
~  1  10, 2  10, 3  15, 4  20
D dj t   20,1,1, j  1,6, t  2,3  4
49 ~
50
D dj 4  25,1,1, j  1,6
51 ~ i  0.1
52
53 D dj t   0,0,0, j  1,6, t  2,3
~ J1  4, J1  2
54
55 C1j t   50, j  J , t  1,,T  J 2  3, J 2  
1
C 2j t   30, j  J , t  1,,T  J 3   , J 3  1,3
56
57
58
C 3j t   25, j  J , t  1,,T  pk  10, k  1,,8
59
60
61
62
27
63
64
65