ISEN 601 Location Logistics Dr. Gary M. Gaukler Fall 2011

Heuristics Improvement heuristic: The myopic algorithm identifies the n median locations. Customers are assigned to their closest median. Improvement heuristic:

Myopic Example

Myopic Example

Improvement Example

Improvement Example

Improvement Example

Discrete Location Models “Warehouse Location Problem” p potential warehouse locations

Warehouse Location Problem Cost structure is more general: Fixed costs Variable shipping/transportation costs

Warehouse Location Problem Decision variables:

Warehouse Location Problem Mixed-integer programming formulation:

Warehouse Location Problem Heuristic algorithms: Add heuristic Drop heuristic Note that total cost generally decreases as facilities are added, and then increases after a point:

Warehouse Location Problem Add heuristic: Greedily add facilities to the solution until there is no facility to add that will reduce total cost Drop heuristic: Start with one facility at each candidate site. Remove facilities one by one until removal does not decrease total cost

Warehouse Location Problem Example Add heuristic:

Warehouse Location Problem Example Add heuristic:

Warehouse Location Problem Example Add heuristic:

Warehouse Location Problem Example Drop heuristic:

Warehouse Location Problem Example Drop heuristic:

Transportation Trends

Transportation Some terms FTL: LTL:

Transportation Transportation by type Cost / ton-mile Air: FTL: LTL:

Types of Transportation Paths Direct Shipment:

Direct Shipment Math formulation:

Direct Shipment When to use?

Improvements to Direct Shipment Option 1: Crossdocking

Improvements to Direct Shipment Option 2: DC

Improvements to Direct Shipment Option 3: Delivery rounds / TSP

Traveling Salesman Problem Problem statement:

Traveling Salesman Problem BIP formulation:

Traveling Salesman Problem Subtours: