Design of a Distribution Network Using Primal-Dual Decomposition

Abstract

A method to solve the design of a distribution network for bottled drinks company is introduced. The distribution network proposed includes three stages: manufacturing centers, consolidation centers using cross-docking, and distribution centers. The problem is formulated using a mixed-integer programming model in the deterministic and single period contexts. Because the problem considers several elements in each stage, a direct solution is very complicated. For medium-to-large instances the problem falls into large scale. Based on that, a primal-dual decomposition known as cross decomposition is proposed in this paper. This approach allows exploring simultaneously the primal and dual subproblems of the original problem. A comparison of the direct solution with a mixed-integer lineal programming solver versus the cross decomposition is shown for several randomly generated instances. Results show the good performance of the method proposed.