Warehouse-Retailer Network Design With Economies And Diseconomies Of Scale

Traditionally,the integrated logistics network design problem either considers warehouse operating costs as a fixed cost or considers economies of scale in warehouse operating costs,making the problem tractable.However,due to the reasons,such as the overuse of recourses,the complexity of operations,and warehouse congestions,the operating cost of a warehouse exhibits diseconomies of scale when its service volume exceeds a certain level,which is often ignored in this stream of studies.In this thesis,we study an integrated logistics network design problem with an outside supplier,multiple candidate warehouse locations,and multiple retailers,in which the operating cost of each warehouse exhibits economies of scale first,and then diseconomies of scale when its service volume exceeds a certain level.The problem is to determine the number and locations of open warehouses,warehouse-retailer assignments,and the optimal inventory replenishment policies of open warehouses and retailers to minimize the set-up,operating,transportation,and multi-echelon inventory replenishment costs.We formulate the problem as a set-covering model and solve the linear programming relaxation of the set-covering model via the column generation method.The pricing subproblem that must be solved at each iteration of the column generation is formulated as a nonlinear mixed-integer programming model.After analyzing the structural property of the model of the pricing subproblem,we propose an approach based on the branch-and-bound method to solve it effectively.We conduct numerical experiments based on randomly generated instances to test the effectiveness of the column generation method for solving the problem.The computational results demonstrate that the number of open warehouses is nonincreasing with the economic point of each warehouse operating cost and the weight of the multi-echelon inventory replenishment cost.