The location-routing problem: Considerations in physical distribution system design

The design of a physical distribution system is a complex task because of the various elements involved, along with their interactions. Two key elements of the system are location of depots and routing of customers from the depots. The interdependence between these two elements has been studied and solution procedures have been developed. Most research into the design of distribution systems has, however, overlooked the possible effect of the system’s environment on the solution efficacy. There are various environmental and operational factors that must be considered in physical distribution system design. In this research, several significant environmental factors that influence distribution system design such as ratio of location to routing cost and spatial distribution of customers are investigated. The effect of these factors on some alternative location-routing procedures is examined. The research shows that the performance of alternative location-routing procedures is affected by various key environmental factors. The implication for the decision maker is that the choice and use of alternative solution procedures should be based on systems’ environment.