Integrated service network design for a cross-docking supply chain network

This paper considers an integrated service network design problem for a given set of freight demands that is concerned with integration of locating cross-docking (CD) centers and allocating vehicles for the associated direct (transportation) services from origin node to a CD center or from a CD center to the destination node. For the vehicle allocation, direct services (sub-routes) should be determined for the given freight demands, and then the vehicle allocation has to be made in consideration of routing for the associated direct service fulfillment subject to vehicle capacity and service time restriction. The problem is modeled as a path-based formulation for which a tabu-search-based solution algorithm is proposed. To guarantee the performance of the proposed solution algorithm, strong valid inequalities are derived based on the polyhedral characteristics of the problem domain and an efficient separation heuristic is derived for identifying any violated valid inequalities. Computational experiments are performed to test the performance of the proposed solution algorithm and also that of a valid-inequality separation algorithm, which finds that the solution algorithm works quite well and the separation algorithm provides strengthened lower bounds. Its immediate application may be made to strategic (integrated) service network designs and to tactical service network planning for the CD network.