The Model for Location Routing Problem with Roaming Delivery Locations

Abstract

The Location Routing Problem with Roaming Delivery Locations (LRPRDL) is a model that represents company activities in delivering products to final customers. Direct delivery to final customers has increased significantly over the growth of e-commerce in the world. E-commerce or business-to-customer companies are urged to increase their last-mile distribution efficiency to survive in the global competition. For that purpose, the LRPRDL  model was proposed to increase the efficiency of the company’s last-mile distribution. The model aims to minimize the sum of open depots and transportation costs by determining the number and location of depots and the shipping routes. The LRPRDL was implemented in an instance with four depot candidates, 15 customers, and six vehicles. The instance was solved to the optimality by using a public solver Gurobi. Furthermore, this research conducted a sensitivity analysis on the open depots and fuel costs, customer demand, and radius. The study indicated that customer’s demand and radius have a significant impact on the purchase decision.