Abstract
This paper studies a bi-level programming model addressing the location-inventory problem which can determine the location of distribution centers and the inventory strategy of distribution centers and stores at the same time. In the location-inventory joint decision model, the order quantity is a continuous decision variable associating the upper and lower models and the remaining decision variables are 0-1 variables. In this paper, a branch and bound method is proposed and the SCIP solver is used to solve the bi-level mixed integer non-linear programming problem. The results show that collaborative optimization can save more costs than the one-by- one optimization method and that the optimal solution has better stability under the condition of demand fluctuation and satisfies the optimal allocation of important customers.
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