Considering sustainability and resilience in a location-routing problem

Abstract

Purpose: Sustainability and resilience have emerged as two important topics. Consumers and governmental entities are becoming increasingly aware of the existing environmental and social issues, motivating companies to adopt more sustainable practices. In addition, the uncertainty and unpredictability that characterize today's competitive environment force companies to be able to handle disruptions efficiently. Despite this, when looking at some classes of problems in literature, cost is still the most, or even the only, objective addressed. This work analyses the integration of sustainability and resilience concerns in a class of problems that is often found in logistics, the Location-Routing Problem (LRP).Design/methodology/approach: A multi-objective LRP is addressed with the following objectives: minimization of the total cost of the logistics network, minimization of the environmental impact of CO2 emissions, and maximization of the resilience of the distribution network. Aiming to explore the effect that designing a more sustainable and resilient distribution network can have on its operating costs, the ?-constraint method is applied.Findings: Results show that resilience and environmental impacts, from a practical point of view, should not be considered in isolation, as they can have significant impacts on costs. Nevertheless, it is conceivable to design logistics networks that ensure a good compromise between operating costs, environmental impacts, and resilience to disruptions.Originality/value: This paper is an exploratory study addressing a new type of location-routing problem which, besides the usual cost objective, considers sustainability and resilience as objectives. The paper evaluates the sensitivity of the costs of logistics networks to the improvement of their resilience and sustainability. A new multi-objective formulation is proposed for this class of problems, tested in instances based on real-world data. The paper may provide important managerial insights for designing sustainable and resilient logistics networks.