A Multi-Objective Evolutionary Approach for an Integrated Location-Inventory Distribution Network System

In this book, we examined an integrated location-inventory and vendor selection problem under a vendor managed inventory (VMI) setup. The goal is the determination of i)the set of vendors the firm should work with; ii)the number and locations of distribution centers (DCs) or warehouses and also the assignment of retailers to DCs and iii)how much each retailer should order from the selected vendors. With these considerations, we present a Multi-Objective Location-Inventory Problem (MOLIP) which results in a Mixed-Integer Non-Linear Programming formulation. The MOLIP model is difficult to solve with existing optimization algorithms due to the considerable number of decision variables and constraints. Therefore, we rely on a hybrid multi-objective evolutionary algorithm to provide an efficient facility location portfolio, and permits a comprehensive trade-off evaluation between the “quality” of the set of elite solutions and the time and memory required to produce them. Computational results demonstrating the performance of the proposed heuristic methods and the potential practical impact of integrated decision making for location-inventory and vendor selection decisions are reported.