Location Selection of Urban Distribution Center with a Mathematical Modeling Approach Based on the Total Cost

Location selection for urban distribution centers (DCs) is vital in saving distribution cost and reducing the negative externalities arising from freight transportation. Yet increasing level of logistics sprawl in megacity associated with various urban diseases has been creating new challenges for selecting the location of DCs. In this paper, a mathematical model is proposed to enable an efficient and green distribution system by minimizing the total cost, which contains economics cost, environmental cost, and socio-economic cost. The model is a mixed-integer linear programming model and is characterized with quantifying and pricing the multifarious negative externalities. To verify the effectiveness of the model, a case study is conducted. IBM ILOG CPLEX is adopted for optimization purpose. Then, a sensitive analysis is provided to investigate the impact of various parameters coefficients on the results. This new method provides a good reference for municipal management department in planning urban DC and will contribute to promoting urban green development by reducing the negative externalities of distribution operation.