Structural Properties of third-party logistics networks

A third party logistic provider operates a distribution network with minimal control over supply and demand. The operation is characterized by three levels: a strategic level that includes the location and sizing of warehouse, a tactical level that determines the links between customers, warehouses and producers and an operational level that determines the size of the flows through the links at any given time. An algorithm to optimize the operational level is determined for a given network structure. Starting with a fully connected network, optimal operations are determined. A robust reduced network is found by deleting the least used links until the operational costs increase dramatically. The topological structures of the reduced network as a function of backlog and transportation costs are determined.

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