Hyperconnected Facility Location Contracting
Author(s)
Shi, Jiachen
Dey, Santanu S.
Montreuil, Benoit
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Abstract
Facility location problems (FLP) in supply chain management involve determining the optimal placement of facilities to support operations of supply chain networks and meet customer demand. In a traditional FLP, decision-makers must weigh the costs of location and allocation, which typically include the construction and operational costs of the facilities, and transportation expenses to customer demand points. In light of Physical Internet (PI), logistics infrastructure is shifting from private networks to an open web of interrelated networks, each involving multiple organizations collaborating to share resources, optimize operations, and enhance service responsiveness. Physical Internet enabled hyperconnected fulfillment, where fulfillment operations are no longer isolated within a retailer’s private network; instead, decision makers can access a wide range of open-source fulfillment facilities that are interconnected, openly available, and their service capacity available for contract on demand. This paper studies the Hyperconnected Facility Location Contracting problem that generalizes several FLPs. The framework integrates PI principles and facility location modeling. It consists of determining contracts for open-source facilities to fulfill e-commerce demand over a multi-period planning horizon.
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Date
2025-06
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Text
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Proceedings
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