The Multi-Echelon Vehicle Routing Problem with Cross-Docking in Supply Chain Management

Abstract

Multi-echelon distribution networks are quite common in supply chain and logistics. Deliveries of multiple items from factories to customers are managed by routing and consolidating shipments in warehouses carrying on long-term inventories. On the other hand, cross-docking is a logistics technique that differs from warehousing because products are no longer stored at intermediate depots. Instead, cross-dock facilities consolidate incoming shipments based on customer demands and immediately deliver them to their destinations. Hybrid strategies combining direct shipping, warehousing and cross-docking are usually applied in real-world distribution systems. This work deals with the operational management of hybrid multi-echelon multi-item distribution networks. The goal of the N-echelon vehicle routing problem with cross-docking in supply chain management (the VRPCD-SCM problem) consists of satisfying customer demands at minimum total transportation cost. A monolithic optimization framework for the VRPCD-SCM based on a mixed-integer linear mathematical formulation is presented. Computational results for several problem instances are reported.