Abstract
A smooth operation of the fourth party logistics supply chain network requires the cooperation of multiple distribution centers and third party logistics. Any unexpected disruption caused by a certain distribution center may lead to serious consequences to the whole fourth party logistics supply chain. Therefore, we study the reliable fourth party logistics location-routing problem in the network design considering disruption risk of distribution centers. In addition, to minimize the total cost of the proposed problem, a scenario-based integer programming model is established to locate distribution centers, to select proper third party logistic providers, and to accomplish the vehicle routing from distribution centers to customers. Then, a two-level heuristic framework is proposed to handle this NP-hard problem through dividing the original problem into two sub-problems. One is the reliable fourth party logistics location assignment problem, and the other is the fourth party logistics vehicle routing problem. These two sub-problems can be independently solved and iteratively composed to get to the solution of the original problem. Furthermore, numerical experiments are designed, and the effectiveness of the heuristic framework is tested by comparing the quality of solutions and running time with those calculated by using CPLEX. Managerial insights are also provided based on the calculation results.
Highlights
T HE fourth party logistics (4PL) was introduced by Accenture in 1998, which is described as an integrator that assembles the resources, capabilities, and technologies of its own organization and other organizations to design, build, and operate comprehensive supply chain solutions [1], which means 4PL providers can integrate the third party logistics (3PL) providers to design logistics network to improve the efficiency of logistics. 4PL network includes multiple 3PL providers apart from the suppliers, distributors and customers
We propose a customized heuristic based on a two-level framework, which is a model transformation to solve reliable 4PL location assignment problem (4PL-LAP) by CPLEX and a modified sequential saving approach (MSSA) to solve 4PL vehicle routing problem (4PL-VRP)
We find that the optimal solutions obtained by the reliable 4PL location-routing problem (4PL-locationrouting problem (LRP)) model are usually infeasible
Summary
T HE fourth party logistics (4PL) was introduced by Accenture in 1998, which is described as an integrator that assembles the resources, capabilities, and technologies of its own organization and other organizations to design, build, and operate comprehensive supply chain solutions [1], which means 4PL providers can integrate the third party logistics (3PL) providers to design logistics network to improve the efficiency of logistics. 4PL network includes multiple 3PL providers apart from the suppliers, distributors and customers. We introduce a novel model, designing a 4PL-LRP program model, to minimize the total system cost by properly selecting certain DC locations and 3PL providers. We present a heuristic based on a two-level framework that divides this NP-hard problem into two sub-problems to solve 4PL-LRP, which are the reliable 4PL location assignment problem (4PL-LAP) and the 4PL vehicle routing problem (4PL-VRP), respectively. An efficient heuristic based on a modified sequential savings approach is presented to solve 4PL-VRP. These contributions would be beneficial to the design of the 4PL network in real world.
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