A Greedy Heuristic for a Three-Level Multi-Period Single-Sourcing Problem
19 Pages Posted: 20 Jan 2003
Date Written: 31 2000 3,
In this paper we consider a model for integrating transportation and inventory decisions in a three-level logistics network consisting of plants, warehouses, and retailers (or customers). Our model includes production and throughout capacity constraints, and minimizes production, holding, and tansportation costs in a dynamic environment. We show that the problem can be reformulated as a certain type of assignment problem with convex objective function. Based on this observation, we propose a greedy heuristic for the problem, and illustrate its behaviour on a class of randomly generated problem instances. These experiments suggest that the heuristic may be asymptotically feasible and optimal with probability one in the number of customers.
Keywords: dynamic models, dynamic demand pattern, transportation costs, inventory costs, heuristic solution approaches
JEL Classification: M, M11, R4, R49
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