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Warehouse location and two-echelon inventory management with concave operating cost

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  • Jia Shu
  • Ting Wu
  • Kaike Zhang

Abstract

In this paper, we study a location–inventory network design problem which jointly optimises the warehouse location, the warehouse–retailer assignments, the warehouse–retailer echelon inventory replenishment and the safety stock-level decisions over an infinite planning horizon. The consideration of the facility operating cost, the safety stock cost and the two-echelon inventory cost results in an MIP model with several nonlinear terms. Due to the complex trade-offs among the various costs and multiple nonlinear terms in the model, traditional solution approaches no longer work for this problem. We outline a polymatroid cutting-plane approach based on the submodular property of the cost terms to address this problem. Computational results demonstrate that the cutting-plane method based on polymatroid inequalities can efficiently solve randomly generated instances with moderate sizes.

Suggested Citation

  • Jia Shu & Ting Wu & Kaike Zhang, 2015. "Warehouse location and two-echelon inventory management with concave operating cost," International Journal of Production Research, Taylor & Francis Journals, vol. 53(9), pages 2718-2729, May.
    • Handle: RePEc:taf:tprsxx:v:53:y:2015:i:9:p:2718-2729
    DOI: 10.1080/00207543.2014.977456
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    Cited by:

    1. Gudivada Durga Bhavani & Ieva Meidute-Kavaliauskiene & Ghanshaym S. Mahapatra & Renata Činčikaitė, 2022. "Pythagorean Fuzzy Storage Capacity with Controllable Carbon Emission Incorporating Green Technology Investment on a Two-Depository System," Energies, MDPI, vol. 15(23), pages 1-34, November.
    2. Li Xia & Zhe George Zhang & Quan‐Lin Li, 2022. "A c/μ‐Rule for Job Assignment in Heterogeneous Group‐Server Queues," Production and Operations Management, Production and Operations Management Society, vol. 31(3), pages 1191-1215, March.
    3. Ioannis Avgerinos & Ioannis Mourtos & Georgios Zois, 2022. "Multi-type facility location in printing and parcel delivery services," Annals of Operations Research, Springer, vol. 309(1), pages 365-393, February.

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