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— Presentation at IEOM 2017 —
May 29, 2017
IEOM 2017 –7th International Conference on Industrial Engineering and Operations Management– was held in Rabat, Morocco, from 11th to 13th in April, 2017. IEOM Society encourages sharing information in the field of Industrial Engineering (IE) and Operations Management (OM). IEOM2017 is the annual conference of the IEOM. In the conference, there were several sessions such as lean six sigma, inventory management and supply chain management. Attendees from 55 countries held over 500 presentations.
We made a presentation titled "Location Routing Problem with Transportation Mode Options" which co-authored with Hitachi Transport system. The purpose of our research is improvement of the logistics efficiency. Expansion of internet shopping entails increase of delivery costs. In order to reduce delivery costs, locations of distribution center and delivery routes should be decided adequately. This problem is called "the Location Routing Problem (LRP)". The LRP consists of two well-known problems, the Facility Location Problem (FLP) and the Vehicle Routing Problem (VRP). Both are NP-hard problems, therefore they have been studied individually. The LRP is solved by solving each problem sequentially in the previous studies. That is, they solve the FLP first to decide locations of distribution center. After that, they solve the VRP based on the decided locations of distribution center.
Fig. 1 Example of efficiently selection of
logistics center locations
Fig. 2 Result of numerical experiments
However, locations of distribution center obtained from the previous study are the center of gravity of the delivery sites. This allocation is optimal only when delivered directory from the distribution center to the delivery sites, but the delivery distance tends to be longer when delivered by routes. Therefore, the number of delivery trucks increases and delivery costs become higher (Fig. 1).
On the other hand, in our study, we integrated the FRP and the VRP by preparing the delivery routes before solving the FLP. The integrated problem decides the locations of distribution center using not only direct delivery from the distribution center to delivery sites, but also the route delivery as an option. As a result of numerical experiments based on actual data, we confirmed that our method can reduce delivery costs by 15% compared to the previous study (Fig. 2).
From now on, we will work on development of more efficient allocation method of distribution center. In this method, the locations of distribution center are decided based on inventory in addition to delivery cost. We will contribute to improve efficiency in logistics through our study.
(By HOSODA Junko)