Developing a location-inventory-routing model using METRIC approach in inventory policy

Abstract

Locating, routing and inventory control in production and distribution centers are the most important decisions in supply chain management. Because of the dependence of these decisions to each other, considering these three aspects simultaneously can have a huge impact on cost reduction. In this study, first, a location-inventory model is developed by utilizing METRIC approach and then, METRIC approach is applied to the location-inventory-routing model. The intended supply chain includes a supplier, distributors and retailers, and the inventory control policy is implemented for both the distributors and retailers. Retailers' demand follows Poisson distribution and the lead-time is also considered probabilistic and is affected by the shortage in distribution centers. Given that the presented model belongs to the class of NP-hard problems, a hybrid metaheuristic solution method is also presented to solve the resulted problem. The proposed hybrid metaheuristic algorithm contains a Simulated Annealing algorithm, to optimize the location-routing problem, and a Genetic Algorithm, to optimize the inventory problem. Also, to evaluate the performance of hybrid algorithm, a comparison between the results of the proposed hybrid algorithm and the exact solutions obtained from Lingo software is provided and, finally, the results are analyzed.Growing Science Ltd. All rights reserved. 7

Logistics Center Location-Inventory-Routing Problem Optimization: A Systematic Review Using PRISMA Method

“…The goal is to minimize the total amount of negative inventories (i.e., customer product shortages) for each product in a warehouse for each customer [51]. TSCC and SC are also discussed as a single objective function, as mentioned in [117].…”

“…Furthermore, the (S − 1, S) inventory strategy requires replenishment orders to be placed after the size of each demand equals the size of the demand [116]. In this strategy, once a demand request is received and a response is received, the inventory level is reduced by one unit and a replacement order is sent by reducing the inventory of each unit [117]. As shown in Figure 15, the (Q, R) policy covers 18 papers, which is the largest part of ICRP.…”