Integrated optimization of location, inventory and routing in supply chain network design

Abstract

We study the integrated optimization of location, inventory and routing in supply chain network design (SCDN) problem. The SCND decision has significant impact on the performance of the supply chain. The major obstacles of the integrated optimization are the high non-linearity and the huge amount of variables and constraints caused by routing. In this paper, we introduce real-world constraints into the integrated model to characterize the model much more precisely, which simultaneously reduce the dimension of the problem. We propose an exact algorithm based on the Generalized Benders Decomposition (GBD) method to solve the model. We can obtain the Benders Cuts (BC) explicitly. We verify the effectiveness of the model and method by a real-life case: A passenger car supply chain network design case.