A time-expanded network reduction matheuristic for the logistics service network design problem

Planning cost-effective logistics operations involve the integration of multiple decision-making levels. In thedomain of supply chain management, the last decades have seen the emergence of 3PL service providers thatspecialize in integrating warehousing and transportation services. In this paper, we study the operations performedby a 3PL in the supply chain management of a French restaurant chain. The transportation planning process isassisted by solving the Logistics Service Network Design Problem (LSNDP). As realistic instances are too largefor on-the-shelf optimization solvers to solve in acceptable run-times, we develop a network reduction heuristicinspired by the recent Dynamic Discretization Discovery algorithm. Through an extensive series of experimentscarried out on instances based on the operations of an industrial partner, we demonstrate the efficiency of theproposed approach. We also investigate the impact of the distribution strategy used in practice to determine thetransportation plan and how this distribution strategy can be modified to reduce the overall logistics costs.