GENETIC ALGORITHM SOLUTION FOR MULTI-PERIOD TWO-ECHELON INTEGRATED COMPETITIVE/UNCOMPETITIVE FACILITY LOCATION PROBLEM

Abstract

This paper addresses the multi-period two-echelon integrated competitive/uncompetitive facility location problem in a distribution system design that involves locating regional distribution centers (RDCs) and stores, and determining the best strategy for distributing the commodities from a central distribution center (CDC) to RDCs and from RDCs to stores. The goal is to determine the optimal numbers, locations and capacities of RDCs and stores so as to maximize the total profit of the distribution system. Unlike most of past research, our study allows for dynamic planning horizon, distribution of commodities, configuration of two-echelon facilities, availability of capital for investment, external market competition, customer choice behavior and storage limitation. This problem is formulated as a bi-level programming model and a mutually consistent programming mode, respectively. Since such a distribution system design problem belongs to a class of NP-hard problem, a genetic algorithm-based heuristic (GA) is presented and compared with random search solution and mutually consistent solution (MC) using numerical example. The computational results show that the GA approach is efficient and the values of the performance index were significantly improved relative to the MC.