Location Routing Inventory Problem with Transshipment Points Using p-Center

Location Routing Inventory Problem with Transshipment (LRIP-T) is a collaboration of the three components in the supply chain which are location-allocation, vehicle routing and inventory management problems that allows transshipment process, in a way that the total system cost and the total operational time are minimized. This study is to determine a set of customer points to act as the transshipment point as and when it is necessary, based on the surplus quantities it has, the quantities to ship to the needing customers and the sequence in which customers are replenished by homogeneous fleet of vehicles. This LRIP-T is modified by making one or more of the customer points in the distribution system as the transshipment points with the selection of the points are done using p-center. Sensitivity analysis for two cases: 1) unlimited supply, 2) limited supply are presented. Results show important savings achieved when compared to the existing model in solving the supply chain problem.