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.
|Title of host publication
|Quantitative Approaches to Distribution Logistics and Supply Chain Management
|Andreas Klose, M. Gracia Speranza, Luke N. Van Wassenhove
|Place of Publication
|Published - 2002
|Lecture Notes in Economics and Mathematical Systems