A Study on Integrated Transportation and Facility Location Problem

Abstract

The focus of this thesis is the development and solution of problems that simultaneously involve the planning of the location of facilities and transportation decisions from such facilities to consumers. This has been termed integrated distribution planning problems with practical application in logistics and manufacturing. In this integration, different planning horizons of short, medium and long terms are involved with the possibility of reaching sub-optimal decisions being likely when the planning horizons are considered separately. Two categories of problems were considered under the integrated distribution models. The first is referred to as the Step-Fixed Charge Location and Transportation Problem (SFCLTP). The second is termed the Fixed Charge Solid Location and Transportation Problem (FCSLTP). In these models, the facility location problem is considered to be a strategic or long term decision. The short to medium-term decisions considered are the Step-Fixed Charge Transportation Problem (SFCTP) and the Fixed Charge Solid Transportation Problem (FCSTP). Both SFCTP and FCSTP are different extensions to the classical transportation problem, requiring a trade-off between fixed and variable costs along the transportation routes to minimize total transportation costs. Linearization and subsequent local improvement search techniques were developed to solve the SFCLTP. The first search technique involved the development of a hands-on solution including a numerical example. In this solution technique, linearization was employed as the primal solution, following which structured perturbation logic was developed to improve on the initial solution. The second search technique proposed also utilized the linearization principle as a base solution in addition to some heuristics to construct transportation problems. The resulting transportation problems were solved to arrive at a competitive solution as regards effectiveness (solution value) compared to those obtainable from standard solvers such as CPLEX. The FCSLTP is formulated and solved using the CPLEX commercial optimization suite. A Lagrange Relaxation Heuristic (LRH) and a Hybrid Genetic Algorithm (GA) solution of the FCSLTP are presented as alternative solutions. Comparative studies between the FCSTP and the FCSLTP formulation are also presented. The LRH is demonstrated with a numerical example and also extended to hopefully generate improved upper bounds. The CPLEX solution generated better lower bounds and upper bound when compared with the extended LRH. However, it was observed that as problem size increased, the solution time of CPLEX increased exponentially. The FCSTP was recommended as a possible starting solution for solving the FCSLTP. This is due to a lower solution time and its feasible solution generation illustrated through experimentation. The Hybrid Genetic Algorithm (HGA) developed integrates cost relaxation, greedy heuristic and a modified stepping stone method into the GA framework to further explore the solution search space. Comparative studies were also conducted to test the performance of the HGA solution with the classical Lagrange heuristics developed and CPLEX. Results obtained suggests that the performance of HGA is competitive with that obtainable from a commercial solver such as CPLEX.