Location selection for logistics centre using PROMETHEE method

Logistics and distribution centres are essential to the supply chains of many manufacturing and logistics companies. Efficiently locating logistic centres involves thorough search for optimal place, prioritizing proximity to suppliers and minimizing costs. Companies’ management often solves the location problem of new halls, mostly to minimise the associated costs. Such a problem is solved in the automotive industry as part of the launch of a new international project. The key factor for the decision of where to locate the logistics centre is the location of the suppliers, since material deliveries generate a large part of the project costs. The aim of this study is to define a methodology for the location of the logistics centre, considering several alternative locations and relevant criteria. The location alternatives and criteria are defined in terms of minimising project costs and sustainability elements. The problem is solved using the multi-criteria decision-making approach. First, the AHP method is used to assign weights to the criteria. Then the PROMETHEE method is applied to find a suitable location for the logistics centre and to perform a thorough sensitivity analysis. The sensitivity analysis is focused on the impact of values of weights on the solution. Consequently, the analysis proves the correctness of the selected alternative. Based on the case study, a general methodology for locating a logistics centre is proposed.