A multi-objective location-allocation problem with lateral transshipment between distribution centres

Location‐allocation problem as one of the strategic decisions in supply chain management has become the focus of research attention. In this paper we design a distribution network by modelling for location‐allocation in a supply chain that involves a fixed plant, distribution centres with multiple levels of capacities and retailers. The aim is to select the optimum numbers, locations, capacities of the opening warehouses, allocation retailers to the opened warehouses, therefore all multi‐product stochastic customer demands are satisfied at the minimum total cost of the distribution network and the maximum average of warehouse utilisation. In addition lateral transshipment within an inventory system is considered (i.e., product movements between locations of the same echelon). The model developed as a mixed‐integer nonlinear programming model and an efficient heuristic‐based memetic algorithm is proposed. Furthermore, a number of test problems are solved and the associated results are compared to evaluate the performance of the proposed algorithm.