Meta-heuristic approaches with memory and evolution for a multi-product production/distribution system design problem

We consider a multi-product two-stage production/distribution system design problem (PDSD) where a fixed number of capacitated distribution centers are to be located with respect to capacitated suppliers (plants) and retail locations (customers) while minimizing the total costs in the system. We present a mixed-integer problem formulation that facilitates the development of efficient heuristic procedures. We provide meta-heuristic procedures, including a population-based scatter search with path relinking and trajectory-based local and tabu search, for the solution of the problem. We also develop efficient construction heuristics and transshipment heuristics that are incorporated into the heuristic procedures for the solution of subproblems. We present extensive computational results that show the high performance of the solution approaches. We obtain smaller than 1.0% average optimality gaps with acceptable runtimes, even for relatively large problems. The computational results also demonstrate the effectiveness of the construction and transshipment heuristics that impact the solution quality and overall runtimes. (C) 2006 Elsevier B.V. All rights reserved.