A greedy heuristic for a three-level multi-period single-sourcing problem

H.E. Romeijn, D. Romero Morales

In this paper we consider a model for integrating transportation and inventory decisions in a three-level logistics network consisting of plants, warehouses, and retailers. Our model includes production and throughput capacity constraints, and minimizes production, holding, and transportation costs in a dynamic environment. We show that the problem can be reformulated as a certain type of assignment problem with convex objective function. Based on this observation, we propose a greedy heuristic for the problem, and illustrate its behaviour on a class of randomly generated problem instances. These experiments suggest that the heuristic may be asymptotically feasible and optimal with probability one as the number of retailers increases.

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