Inventory service-level optimization in a distribution network design problem using heterogeneous fleet

This paper is an extension of a study that presents a model and a three phase's methodology for distribution networks design based on the location-allocation problem (LRP) and the inventory-routing problem (IRP) considering a fleet of vehicles with heterogeneous capacity. The methodology first phase is facilities location, second phase is facilities allocation, and third phase is inventory-routing. In the last phase, the re-order time (T) per facility is obtained, considering a constant level of service (α) for all facilities. In this paper, the problem is modified by aggregating shortage or unfilled demand costs (Pc) to the objective function, and the methodology phase three is modified by including decision variable α. T and α are obtained by the application of two heuristics. In this paper, we show that the inclusion of α as decision variable, improves solution.