Redesign of Three-Echelon Multi-Commodity Distribution Network
This research studies the distribution network redesign of an actual electronics company. The problems are formulated based on multi-echelon capacitated Location Routing Problem (LRP) with two commodities: home products and service items. The objective function consists of three components: facility cost, closing cost of facility and transportation cost. We propose solution method based on clustering technique. The problem is decomposed into the Facility Location Allocation Problem (FLAP) and the Multi-Depot Vehicle Routing Problem (MDVRP). MDVRP is solved by clustering method and feed the results to the modified FLAP to allocate the demand nodes to facilities and configure all distribution networks, for the 2nd and 3rd echelon. The distribution is divided into five region zones. Previously, each region was operated independently but this research compares the solutions from solving each region independently and solving all five zones simultaneously. The results indicate that the proposed solution method can achieve computation time and total cost that are comparable to ones obtained from solving the problem to optimality. Exact approach can only solve small and medium problems, whereas the proposed solution method provides the acceptable solution of real-life largest problem in limit of computation time. Finally, we perform sensitivity analysis on the results.
How to Cite
Authors who publish with Engineering Journal agree to transfer all copyright rights in and to the above work to the Engineering Journal (EJ)'s Editorial Board so that EJ's Editorial Board shall have the right to publish the work for nonprofit use in any media or form. In return, authors retain: (1) all proprietary rights other than copyright; (2) re-use of all or part of the above paper in their other work; (3) right to reproduce or authorize others to reproduce the above paper for authors' personal use or for company use if the source and EJ's copyright notice is indicated, and if the reproduction is not made for the purpose of sale.