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1 Management and Production Engineering Review

1 2011

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Algorithms for joint location-routing problem in a class of network systems

Drwal M., Józefczyk J.

Management and Production Engineering Review

2011

Vol. 2, No. 1

10-18

In many decision making problems, the facility location and route design subproblems are commonly approached separately. This standard practice results in conceptually simpler models, but it often turns out to be too constraining and inaccurate. We propose a mathematical modeling framework of a wide applicability that enriches the locational analysis with the routing aspect, and leads to joint location-routing binary optimization problem. The usefulness of this general framework is presented through an application example in a merchandise delivery of online shopping companies (business-to-consumer e-commerce). Other applications for logistic systems as well as for computer systems are also described and justified. The main advantage of the proposed approach comes out from the precise contrasting suppliers' and consumers' needs. Moreover, if a repeated relocation of facilities is under consideration then taking the long-term planning horizon into account is necessary to obtain realistic and competitive results. Static and dynamic versions of the optimization problem are introduced for which the heuristic solution algorithm based on the Lagrange relaxation and the dynamic programming approach are respectively presented.