Abstract
In a supply chain, the location-routing related cost in a physical distribution system possesses the major working capital. Accordingly, it is an important issue about reducing the location-routing related cost. The purpose of this research is to combine the location-allocation for plants and distribution centers and vehicle routing for facilities and retailers into an integrated mathematical programming model in order to minimize the total setup and operational costs. In many logistic environments, decision markers have to deal with these location selection and vehicle dispatching problems in different levels among plants, distribution centers and retailers.Since the problem addressed in this research is a NP-Hard problem, it is difficult to solve this problem through the exact algorithm. In this research, we will propose two heuristic solution procedures based on the different approaches in order to solve the related model efficiently. One is based on the shortest distance of geometry while we divide the problem into a two-layer problem. The other is based on tabu search algorithm in order to solve the two-layer problem simultaneously. The performance of the proposed heuristic methods will be compared with the results by using CPLEX package in small size problems and showed the relation between facility location and vehicle routing in order to enhance its visual ability in industry.