Integrated distribution network design. Exploiting the benefits of joint location-routing optimization

O. Bräysy, W. Dullaert

In this paper we focus on a new and accurate hub location problem, where the exact routes are planned simultaneously with the hub mix, i.e., the number and location of hubs. The route planning deals with pickup and delivery orders with time windows in a large geographical area, including both long-haul and short-haul route planning at the same time. Moreover, the vehicle fleet is assumed heterogeneous, so the fleet size and mix planning is an integral part of the problem under consideration. The suggested solution methodology is based on combining a new tailored hub location heuristic with a threshold accepting metaheuristic for the route planning. The model and the algorithms are implemented as a part of a commercial vehicle routing system and experimental results are reported on a real-life data obtained from a Finnish transport operator. The tests show that significant cost savings can be achieved by tackling integrated location-routing problems.

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