A Heuristic for the Two-Echelon Multi-Period Multi-Product Location–Inventory Problem with Partial Facility Closing and Reopening

Puntipa Punyim, Ampol Karoonsoontawong (), Avinash Unnikrishnan and Vatanavongs Ratanavaraha
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Puntipa Punyim: Department of Civil Engineering, Faculty of Engineering, King Mongkut’s University of Technology Thonburi, Bangkok 10140, Thailand
Ampol Karoonsoontawong: Department of Civil Engineering, Faculty of Engineering, King Mongkut’s University of Technology Thonburi, Bangkok 10140, Thailand
Avinash Unnikrishnan: Department of Civil and Environmental Engineering, Portland State University, Portland, OR 97201, USA
Vatanavongs Ratanavaraha: School of Transportation Engineering, Institute of Engineering, Suranaree University of Technology, Nakhon Ratchasima 30000, Thailand

Sustainability, 2022, vol. 14, issue 17, 1-32

Abstract: In this paper, the two-echelon multi-period multi-product location–inventory problem with partial facility closing and reopening is studied. For each product and period, plants serve warehouses, which serve consolidation hubs, which service customers with independent, normally distributed demands. The schedule of construction, temporary partial closing, and reopening of modular capacities of facilities, the continuous-review inventory control policies at warehouses, the allocation of customer demands to hubs, and the allocation of hubs to warehouses are determined. The service levels for stockout at warehouses during lead time and the violation of warehouse and hub capacities are explicitly considered. The proposed mixed-integer non-linear program minimizes the weighted summation of the number of different facilities and logistical costs, so that the number of different facilities can be controlled. Since the proposed model is np-hard, the multi-start construction and tabu search improvement heuristic (MS-CTSIH) with two improvement strategies and the modified MS-CTSIH incorporating both strategies are proposed. The experiment shows that the two improvement strategies appear non-dominated, and the modified MS-CTSIH yields the best results. The comparison of the modified MS-CTSIH and a commercial solver on a small instance shows the efficiency and effectiveness of the modified MS-CTSIH. The sensitivity analyses of problem parameters are performed on a large instance.

Keywords: location–inventory problem; multi-period facility location problem; multi-product; modular capacitated facility location problem; tabu search (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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