Location Decision Making and Transportation Route Planning Considering Fuel Consumption

Abstract

This study presents the Location Routing Problem (LRP) for which we have created a model for the integration of locating facilities and vehicle routing decisions to solve the problem. The case study is the Palm Oil Collection Center, which is also important for the supply chain system. A mathematical model was made to minimize the total cost of a facility-opening cost, fixed cost of vehicle uses and fuel consumption cost. The fuel consumption cost relies on the distance and road conditions, in case of poor physical condition of a road, and its width, which can be affected the speed of the vehicle as well as the used fuel. Thus, we propose an Adaptive Large Neighborhood Search (ALNS) based on heuristic for solving the LRP. The ALNS method was tested with three datasets of samples divided into small, medium and large problems. Then, the results were compared with the results from the exact method by the Lingo program. The computational study indicated that the ALNS algorithm was competitive to the results of the Lingo for all instance sizes. Moreover, the ALNS was more effective than the exact method; approximately 99% in terms of processing time. We extended this approach to solve the case study, which was considered to be the largest problem, and the ALNS algorithm was efficient with acceptable solutions and short processing time. Therefore, the proposed method provided an effective solution to manage location routing decision of the palm oil collection center.