This study extends Vidal & Goetschalckx’s  model, emphasizing on how to add concerns of uncertainties on all players in a global logistics system appropriately. By addressing the tradeoffs between overall system reliability and total cost of a global logistics system, an extension model with two operation modes are proposed. Mode 1 operation aims to seek minimum cost on a target of system reliability; whereas Mode 2 operation concentrates on finding out maximum system reliability on a target of cost. To further examine the feasibility of this extended model, experiments on a simplified four-echelon global logistics structure are done. In short, the experiment results help not only to validate the extended model, but also to highlight the effects of the non-linear relation between system reliability and cost (i.e., the effects resulting from thresholds).To sum up, this study provides not merely an improved quantitative reference model for planning the overall logistics system; the two operation modes are believed to be useful for decision makers in terms of how to balance these two kernel but tradeoff concerns (i.e., overall system reliability and total cost) in a logistics system.
International Journal of Electronic Buniness Management, 1(1), 46-53