A relax-and-price heuristic for the inventory-location-routing problem

This paper considers the problem of designing a supply chain assuming routing decisions. The objective is to select a subset of depots to open from a set of candidates, the inventory policies for a two‐echelon system, and the set of routes to perform distribution from the upper echelon to the next b...

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Bibliographic Details
Published in:International transactions in operational research 2015-01, Vol.22 (1), p.129-148
Main Authors: Guerrero, W. J., Prodhon, C., Velasco, N., Amaya, C. A.
Format: Article
Language:English
Subjects:
Algorithms
column generation
Computer Science
Cost function
Decisions
Heuristic
inventory-location-routing problem
Lagrangian relaxation
Mathematical models
Operational research
Operations Research
Policies
Routing
Searching
Shortest path algorithms
Studies
supply chain design
Supply chains
vehicle routing problem
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Summary:This paper considers the problem of designing a supply chain assuming routing decisions. The objective is to select a subset of depots to open from a set of candidates, the inventory policies for a two‐echelon system, and the set of routes to perform distribution from the upper echelon to the next by a homogeneous fleet of vehicles over a finite planning horizon considering deterministic demand. To solve the problem, a partition is proposed using a Dantzig–Wolfe formulation on the routing variables. A hybridization between column generation, Lagrangian relaxation, and local search is presented within a heuristic procedure. Results demonstrate the capability of the algorithm to compute high quality solutions and empirically estimate the improvement in the cost function of the proposed model at up to 9% compared to the sequential approach. Furthermore, the suggested pricing problem is a new variant of the shortest path problem with applications in urban transportation and telecommunications.
ISSN:0969-6016
1475-3995
DOI:10.1111/itor.12091