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.
Introduction
Effective
and efficient transportation of materials and products through the
chain of suppliers, manufacturers, assemblers, distribution centers
(DCs), retail stores, and customers is crucial in the competitive world
of today. In other words, transportation is a key part of a supply chain
which ensures on-time delivery of raw materials and finished products. Decisions made regarding a supply chain transportation
system can be classified into three different levels. The first level
refers to strategic decisions with long-term (several years) effects on
the supply chain. These are mainly the decisions made on the
transportation system design and supplying resources (facility location,
size and capacity of facilities, facility and plant layout,
transportation fleet). The next level is tactical decisions which has
mid-term effects (several months or quarters) and include production and
distribution planning and resource allocation issues (facility space,
fleet size and shipments packaging strategies). Third level is
operational decisions which are made on a daily or weekly basis. Orders
aggregation, shipments, and vehicle fleet dispatch are examples of these
decisions. For the last four decades, researchers
have studied combination of these decisions with a combinational view to
supply chain and transportation problems. In this regard,
location-routing problem (LRP) considers both location (strategic level)
and routing (tactical level) problems. LRP represents a relatively new
form of location problems addressing locating facilities such as
distribution centers and depots, where routing aspects are
simultaneously considered. Reflecting interactions between facility
location and fleet routing, LRP can provide a better view for logistics
analysts and managers, preventing poor and local optimizations. LRP had
growing trends especially in recent years. Govindan et al. used LRP in perishable products distribution system design.
Riquelme-Rodríguez et al. present and compare two methods for
locating water depots along the road network and used arc routing in
their problem. And Gao et al. introduced ant colony optimization
with clustering for solving the dynamic location-routing problem.
Seyedhosseini et al. reviewed dynamic location problems based on
their models, solution, methods and applicability and analyzed gaps for
future research. It can also be used for dynamic LRPs.
In
general, because of geographical distances between producers and
consumers demand for goods transportation has raised. Transportation, especially in long distances, is a world class
business which cannot be accomplished through roads only due to
availability and cost concerns. So there is a need for other
transportation modes or a combination of them (i.e., multimodal
transportation). European Conference of Ministers of Transport in 2001
defined multimodal transportation as "movement of goods in one and the
same loading unit or vehicle, which uses successively two or more modes
of transport without handling the goods themselves in changing modes".
Multimodal transportation has experienced an increased importance during
recent years and now multimodal transportation is competing with
single-mode transportation. In this regard, many transportation
companies have established multimodal transportation services. The
second point is that, multimodal transportation is becoming an important
policy for organizations because of its advantages in terms of cost and
coordination between modes in large-scale cargoes. The
third point is that, in references and handbooks of transportation,
multimodal transportation is treated as an independent and
well-separated transportation mode. Last but not least,
since 1990, the number of papers on multimodal transportation follows a
growing trend. Some researchers have reviewed
the related literatures. To sum up,
multimodal transportation is a relatively new field of research, with
its increasing importance during recent years.
The objective of
this study is to help designing a distribution system with two
transportation network types. First network transfers products from
supplier (with determined location) to DCs via a multimodal
transportation system. On second network, products are distributed among
customers via routing tours started from DCs on a single-mode network.
In this problem, different questions will be answered: which multimodal
route should be used to transfer products to DCs? Is there need to
change mode in determined multimodal routes? And if yes, mode changing
facilities should locate on which multimodal terminals? Each routing
tour generated from open DCs, meet which customers and in what order? In
fact, this study considers LRP and multimodal route selection problem
simultaneously.
Research methodology is consists of the following
sections. First, introduced problem modeled as a linear programming
with a cost minimizing objective. Then mathematical model solved with
GAMS optimizing software and CPLEX solver for two different numerical
instances. Also, a genetic algorithm generated for the problem and its
results compared with CPLEX results.
The following section gives a
review on related literatures on multimodal logistics and
location-routing problem. Then, the subsequent section gives an
explanation of the proposed problem, followed by the section introducing
the corresponding mathematical model. In the following section, the
used solving approach is introduced before demonstrating and solving two
different numerical cases, where the cases are further analytical
discussed. The final section concludes the paper.