An Integrated Location-Routing-Inventory Problem by Considering Supply Disruption

Seyed Mohammad  Seyedhosseini; Ali  Bozorgi-Amiri; Sahar  Daraei

doi:10.4236/ib.2014.62004

Seyed Mohammad Seyedhosseini^*, Ali Bozorgi-Amiri, Sahar Daraei

Abstract: In this paper, we present a model of integrated Location Routing and Inventory problem (ILRIP) with considering random disruption at distribution centers (DCs). The proposed model simultaneously determines the number and the location of DCs that should be opened, the assignment of customers to DCs, the allocation of customers to active routes and the arrangement of customer sineach route, reorder point and economic order quantity for each distribution center, and finally, safety stock level should be kept per distribution center. In this study, we consider a stochastic-demand inventory system where the product’s supply is randomly disrupted in DCs. Distribution centers adopt a (r, Q) inventory control policy. We assume that the distribution centers can be faced with a shortage, in terms of disruption. Partial backordering is applied when a stock out occurs. The model is formulated as a mixed-integer nonlinear programming, which minimizes the expected total cost of the network. We solve the developed mathematical model by meta-heuristic algorithm. Present computational results for several randomly generated instances also for a case study according to literature to show validation of the proposed model.

Keywords: Facility Location, Location-Inventory, Routing, Transportation, SCM

Cite this paper: Seyedhosseini, S. , Bozorgi-Amiri, A. and Daraei, S. (2014) An Integrated Location-Routing-Inventory Problem by Considering Supply Disruption. iBusiness, 6, 29-37. doi: 10.4236/ib.2014.62004.

References

[1] Amin, J., et al. (2011) Designing a Supply Chain Network under the Risk of Disruptions. International Conference on Computers & Industrial Engineering, 429-434.

[2] Arreola-Risa, A. and DeCroix, G.A. (1998) Inventory Management under Random Supply Disruptions and Partial Backorders. Naval Research Logistics, 45, 687-703.
http://dx.doi.org/10.1002/(SICI)1520-6750(199810)45:7<687::AID-NAV3>3.0.CO;2-7

[3] Montgomery, D.C., Bazcuaa, M.S. and Keswani, A.K. (1973) Inventory Models with a Mixture of Backorders and Lost Sales. Georgia Institute of Technology, 20, 255-263.

[4] Liu, S.C. and Lee, S.B. (2003) A Two-Phase Heuristic Method for the Multi-Depot Location Routing Problem Taking Inventory Control Decisions into Consideration. The International Journal of Advanced Manufacturing Technology, 22, 941-950.
http://dx.doi.org/10.1007/s00170-003-1639-5

[5] Liu, S.C. and Lin, C.C. (2005) A heuristic Method for the Combined Location Routing and Inventory Problem. The International Journal of Advanced Manufacturing Technology, 26, 372-381.
http://dx.doi.org/10.1007/s00170-003-2005-3

[6] Shen, Z.-J.M. and Qi, L. (2007) Incorporating Inventory and Routing Costs in Strategic Location Models. European Journal of Operational Research, 179, 372-389.
http://dx.doi.org/10.1016/j.ejor.2006.03.032

[7] Ma, Z. and Dai, Y. (2007) A Stochastic Location-Routing-Inventory Problem in Logistics Distribution Systems. International Conference on Transportation Engineering, 2007, 1433-1438.

[8] Ahmadi Javid, A. and Azad, N. (2010) Incorporating Location, Routing and Inventory Decisions in Supply Chain Network Design. Transportation Research Part E, 46, 582-597.
http://dx.doi.org/10.1016/j.tre.2009.06.005

[9] Yang, X., Ma, H. and Zhang, D. (2010) Research into ILRIP for Logistics Distribution Network of Deteriorating Item Based on JITD. ICICA 2010 ©Springer-Verlag, Berlin Heidelberg, 152-160.

[10] Li, X. and Chen, Y. (2010) Impacts of Supply Disruptions and Customer Differentiation on a Partial-Backordering Inventory System. Simulation Modelling Practice and Theory, 18, 547-557.
http://dx.doi.org/10.1016/j.simpat.2009.12.010

[11] Azimi, P., Ghanbari, M.R. and Mohammadi, H. (2012) Simulation Modeling for Analysis of a (Q, r ) Inventory System under Supply Disruption and Customer Differentiation with Partial Backordering. Modelling and Simulation in Engineering, 2012, 10.
http://dx.doi.org/10.1155/2012/103258

[12] Schmitt, A.J (2011) Strategies for Customer Service Level Protection under Multi-Echelon Supply Chain Disruption Risk. Transportation Research Part B, 45, 1266-1283.
http://dx.doi.org/10.1016/j.trb.2011.02.008

[13] Ma, H., Yang, X. and Zhang, D. (2010) The Research into ILRIP for Single-Stage Logistics Distribution Network under Stochastic Demand Based on JITD. 2010 7th International Conference on Service Systems and Service Management (ICSSSM), Tokyo, 28-30 June 2010, 1-6.