Solving a Dynamic Warehousing Problem Using a Genetic Algorithm

Abstract

Due to the dynamic nature of economic development and market exploration an investigation of the optimal strategy for distributing products over a given period is highly desirable. A time-dependent optimisation model is developed in this paper to help determine the optimal strategy for establishing potential distribution centers. The problem is first formulated as a mixed-integer program (MIP). Solving the MIP is not computationally practical and attractive when the problem size is large. Hence, an alternative heuristic approach is proposed, in which the problem is formulated as a bi-level progrom (BLP) with an upper-level subprogrom and a lower-level subprogrom, the latter being a Hitchcock transportation problem. This approach can minimise the total system cost - which comprises the transportation cost and capital and operating costs at potential distribution centers - over the entire study period. While the lower-level subprogram is solved by standard linear programming routines, the upper-level subpro...