Abstract
This paper considers a location-inventory-routing problem (LIRP) that integrates the strategic, tactical, and operational decision planning in supply chain network design. Both defect and non-defect items of returned products are considered in the cost of reverse logistics based on the economic production quantity model. The objective of the LIRP is to minimize the total cost of location-allocation of established depots, the cost of inventory, including production setup and holding cost, as well as the cost of travelled distance by the vehicles between the open depots and assigned customers. A Hybrid Harmony Search-Simulated Annealing (HS-SA) algorithm is proposed in this paper. This algorithm incorporates the dynamic values of harmony memory considering rate and pitch adjustment rate with the local optimization techniques to hybridize with the idea of probabilistic acceptance rule from simulated annealing, to avoid the local extreme points. Computational experiments on popular benchmark data sets show that the proposed hybrid HS-SA algorithm outperforms a standard HS and an improved HS for all cases.
Highlights
The need for designing networks in a supply chain has been attracting a lot of attention in recent years; a result of the booming development of industrial commerce
We found work on the integration of all three sub-problems, i.e., Location-Inventory-Routing Problem (LIRP) to be very limited especially those utilising the Economic Production Quantity (EPQ) model
Since the EPQ model is less researched despite being a practice of most companies in the industry, we propose the location-inventory-routing problem (LIRP) utilizes the EPQ model for defect and non-defect items in reverse logistics
Summary
The need for designing networks in a supply chain has been attracting a lot of attention in recent years; a result of the booming development of industrial commerce. A practice in traditional commerce is that customers can return the unsatisfactory products they bought within a given certain period of time This process is called the reverse logistics by which the products are returned for proper planning of their disposal [1]. Efficient reverse logistics can reduce cost especially transportation cost, shipping cost, and inventory cost Besides that, it improves the service by offering a fast response to the demands and returns from customers. We found work on the integration of all three sub-problems, i.e., Location-Inventory-Routing Problem (LIRP) to be very limited especially those utilising the Economic Production Quantity (EPQ) model. Since the EPQ model is less researched despite being a practice of most companies in the industry, we propose the LIRP utilizes the EPQ model for defect and non-defect items in reverse logistics.
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