Location-Routing for Distribution Centers
Read this article. One objective of this paper is to determine distribution center locations. Compare and contrast the two cases presented.
Problem description
In a location-routing problem, a supplier of a
product seeks to satisfy demands raised by some retailers in different
locations. To do this, the supplier has to establish a number of DCs.
The problem is defined as the determination of locations for DCs. The
transportation network connecting supplier to potential DCs supposed to
be a multimodal network including three transportation modes (road,
railways and seaways); and transportation from DCs to retailers is
performed via a road network (one mode). On road network products pass
through routing tours to be moved from DCs to retailers. Figure 1
demonstrates the problem schematically. The multimodal links on the
figure can represent either of a road, a railway, a seaway, or a
combination of these transportation modes with multimodal terminals to
change modes.
Fig. 1 Schematic of the proposed problem
![](https://learn.saylor.org/pluginfile.php/5619136/mod_book/chapter/50019/40092_2017_218_Fig1_HTML.jpeg)
This problem is based on the following assumptions:
- Each transportation mode has a specific and determined cost.
- During the transportation operation, transportation mode may be changed at some nodes along the multimodal network.
- Transportation mode can be changed at multimodal terminals where at least two different transportation modes start/end. Providing mode change facilities imposes a fixed cost to the system.
- Product unit does not change when transportation mode changes.
- DCs need a fixed cost to establish.
- Capacities of DCs are constrained by the capacities of the allocated vehicles.
- Retailers' demands are determined and satisfied through routing tours starting from established DCs. The tours return back to the DC after meeting a number of retailers.
- For each DC, one vehicle is allocated with one tour determined for each vehicle.
- Each retailer is assigned to a pair of vehicle and DC.
- Total allocated retailers' demand cannot exceed the vehicle capacity.