A two-phase tabu search approach to the location routing problem

In many distribution systems, the location of the distribution facilities and the routing of the vehicles from these facilities are interdependent. Although this interdependence has been recognized by academics and practitioners alike, attempts to integrate these two decisions have been limited. The location routing problem (LRP), which combines the facility location and the vehicle routing decisions, is NP-hard. Due to the problem complexity, simultaneous solution methods are limited to heuristics. This paper presents a two-phase tabu search architecture for the solution of the LRP. First introduced in this paper, the two-phase approach offers a computationally efficient strategy that integrates facility location and routing decisions. This two-phase architecture makes it possible to search the solution space efficiently, thus producing good solutions without excessive computation. An extensive computational study shows that the TS algorithm achieves significant improvement over a recent effective LRP heuristic.