Incorporating location, routing and inventory decisions in dual sales channel — A hybrid genetic approach

In this study, we present a three-echelon dual sale channel supply chain network including a single vender, multiple distribution centers (DCs), also physical retailers and online customers. In the proposed business model, the vender receives orders either from physical retailers or online customers, then assigns specific DCs to fulfill these orders. The purpose of this problem is to determine the number and locations of DCs which assign both physical retailers and online customers. These decisions are very critical policy that the vender is responsible for managing inventory replenishment at specific DCs. Since the formulated problem is consisting of LIP (Location-Inventory Problem) and LRP (Location-Routing Problem) issues, we develop a genetic algorithm by incorporating a three-phase heuristic approach to solve both LIP and LRP. The experimental results demonstrate trade-off cost relations which impact on the number of potential DCs to be opened under the objective of minimizing total supply chain cost.