A rolling horizon approach for a multi-stage stochastic fixed-charge transportation problem with transshipment

• Published in: European journal of operational research Vol. 301; no. 3; pp. 912 - 922
• Main Authors: Cavagnini, Rossana, Bertazzi, Luca, Maggioni, Francesca
• Format: Journal Article
• Language: English
• Published: Elsevier B.V 16-09-2022
• Subjects: Fixed-charge transportation problem; Logistics; Multi-stage stochastic programming; Rolling horizon approach; Transshipment; Multi-stage stochastic programming; Rolling horizon approach; Fixed-charge transportation problem; Transshipment; Logistics
• ISSN: 0377-2217; 1872-6860
• DOI: 10.1016/j.ejor.2021.11.037

•A fixed-charge transportation problem with transshipment and backordering under stochastic and dynamic demand is studied.•A mixed integer stochastic programming formulation is proposed.•Complexity results for this problem are presented.•A rolling horizon approach is proposed to solve the problem.•Numerical results show that the rolling horizon approach provides effective solutions in short computational time.
We study a fixed-charge transportation problem under stochastic and dynamic demand. We propose a multi-stage mixed integer stochastic programming formulation, where the first-stage decision is the delivery from the supplier to the retailers, while transshipment is used, in addition to classical backordering as recourse decision. The objective is the minimization of the total expected cost. We prove that this problem is NP-hard and, through a worst-case analysis, that transshipment can provide significant cost savings. Extensive computational studies are carried out to evaluate the performance of a rolling horizon approach with respect to the optimal cost. Numerical results show that this heuristic provides effective solutions in short computational time. Managerial insights are finally drawn.