Warehouse Setup Problem in Logistics: A Truck Transportation Cost Model

Abstract

Fast, efficient, timely delivery of goods and optimal transportation cost are the major challenges in a logistics industry. A well-planned transportation system overcomes these challenges and reduces the operational and investment costs of a logistics company. This transportation system is based on the Warehouse-and-Distribution Center (W&DC) network, which is similar to a Hub-and-Spoke (H&S) network. This paper presents a new hub location model based on the truck transportation cost instead of unit cost of goods transportation, since this is more suitable for real world goods transportation scenario from the perspective of a logistics company. Anti-Predatory Nature Inspired Algorithm (APNIA) is used to find the optimal solution of the proposed model. It finds an optimal solution in terms of W&DC (or H&S) network and respective total logistics cost. The proposed approach first finds the location of warehouses and DCs; and then allocates the DCs to warehouses in order to reduce the total logistics cost. Experimental evaluations are conducted on a real-life Warehouse Setup Problem (WSP) of 10 locations of Kanpur city, India. It reveals that the proposed Truck Transportation Cost based Model (TTCM) gives approximate 2%–10% more accurate overall logistics cost from the perspective of a logistics company.