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      A hierarchical solution approach for a multicommodity distribution problem under a special cost structure

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      Author
      Koca, E.
      Yıldırım, E. A.
      Date
      2012
      Source Title
      Computers and Operations Research
      Print ISSN
      0305-0548
      Electronic ISSN
      1873-765X
      Volume
      39
      Issue
      11
      Pages
      2612 - 2624
      Language
      English
      Type
      Article
      Item Usage Stats
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      93
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      Abstract
      Motivated by the spare parts distribution system of a major automotive manufacturer in Turkey, we consider a multicommodity distribution problem from a central depot to a number of geographically dispersed demand points. The distribution of the items is carried out by a set of identical vehicles. The demand of each demand point can be satisfied by several vehicles and a single vehicle is allowed to serve multiple demand points. For a given vehicle, the cost structure is dictated by the farthest demand point from the depot among all demand points served by that vehicle. The objective is to satisfy the demand of each demand point with the minimum total distribution cost. We present a novel integer linear programming formulation of the problem as a variant of the network design problem. The resulting optimization problem becomes computationally infeasible for real-life problems due to the large number of integer variables. In an attempt to circumvent this disadvantage of using the direct formulation especially for larger problems, we propose a Hierarchical Approach that is aimed at solving the problem in two stages using partial demand aggregation followed by a disaggregation scheme. We study the properties of the solution returned by the Hierarchical Approach. We perform computational studies on a data set adapted from a major automotive manufacturer in Turkey. Our results reveal that the Hierarchical Approach significantly outperforms the direct formulation approach in terms of both the running time and the quality of the resulting solution especially on large instances.
      Keywords
      Demand aggregation
      Hierarchical Approach
      Logistics
      Multicommodity distribution
      Network design
      Distribution problem
      Distribution systems
      Network design problems
      Permalink
      http://hdl.handle.net/11693/21273
      Published Version (Please cite this version)
      http://dx.doi.org/10.1016/j.cor.2012.01.007
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