Integrated planning in distribution systems

Distribution systems planning frequently involves two major decisions: facilty location and vehicle routing. The facilities to be located may be ‘primary facilities’, e.g. factories, but more often, these are lighter ‘secondary facilities’ such as depots, warehouses or distribution centres. Routing decisions concern the optimal movement of goods and vehicles in the system, usually from primary to secondary facilities, and from secondary facilities to users or customers. Studies which integrate the two areas are more often than not limited to the case where all deliveries are return trips involving only one destination. There exist, however, several situations where vehicles visit more than one point on the same trip. In such cases, relationships between location and routing decisions become more intricate. Strategies by which the two aspects of the problem are optimised separately and sequentially are often sub-optimal. Also of importance is the trade-off between the cost of providing service and customer inconvenience. A framework is proposed for the study of such combined location-routing problems. A number of real-life cases described in the literature are summarised and some algorithmic issues related to such problems are discussed.