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

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.