Optimization of Location Routing Inventory Problem with Transshipment

Location Routing Inventory Problem (LRIP) is a collaboration of the three components in the supply chain. It is confined by location-allocation, vehicle routing and inventory management. The aim of the study is to minimize the total system cost in the supply chain. Transshipment is introduced in order to allow the products to be shipped to a customer who experiences a shortage, either directly from the supplier or from another customer. In the study, LRIP is introduced with the transshipment (LRIPT) and customers act as the transshipment points. We select the transshipment point by using the p-center and we present the results in two divisions of cases. Based on the analysis, the results indicated that LRIPT performed well compared to LRIP.