An Integrated Model for Location-Routing and Joint Economic Lot Size Problems in Supply Chain Network Design

The aim of traditional Location-Routing Problem (LRP) is to determine the number of warehouses (or distribution centers, DC) needed, their associated locations, and the vehicle routings; its objective is to minimize the total warehouse operating cost and transportation cost. Nevertheless, most LRP models assume that replenishment frequencies to all customers are the same; they do not even take the inventory costs into account. In this study, we relax the constraints of constant delivery frequencies, and incorporate inventory costs into our LRP model. In addition, by applying the Joint Economic Lot Size concept, our proposed model allows each DC ordering lot to be able to satisfy multiple customer replenishment batches. Moreover, production scheduling of the manufacturer is also considered. We will construct an integrated supply chain network model, using the Genetic Algorithm to simultaneously solve: (1) number of DCs needed and their associated locations, (2) vehicle routings with various replenishment frequencies, (3) the ordering lot size of DCs, and (4) the production scheduling of the manufacturer. The objective is to minimize the total operating cost of DCs, transportation cost, inventory ordering and holding cost, production set up cost as well.

Project ID:PF9907-7890
External Project ID:NSC99-2410-H182-018