Publication Date


Document Type


First Advisor

Nguyen, Christine

Degree Name

M.S. (Master of Science)

Legacy Department

Department of Industrial and Systems Engineering


A consolidation center with multiple suppliers and multiple destinations for a perishable product is considered in this research. Perishable products deteriorate with time and this research includes a deterioration cost to measure this behavior. The model considers a variety of suppliers ranging from small to mid-sized. Due to dependencies of inventory and shipment release decisions, an integrated approach of making the operational decisions is necessary. This coordinated approach considers deterioration cost, inventory cost, and transportation cost.

Tradeoff decisions between different supply chain costs are not straightforward as the problem contains constraints like inventory capacity and transportation constraints from suppliers to destinations. Therefore, a mixed-integer programming model (MIP) is formulated to facilitate inventory management and shipping decisions. Since the problem is NP (non-deterministic polynomial-time) hard, it is decomposed into inbound shipment (suppliers to the consolidation center), and outbound shipment problems (consolidation center to destinations). A Lagrangian Relaxation-based heuristic is developed to improve the solution. The heuristic solves using Lagrangian Relaxation and creates feasible solutions by shipping the excess amount of inventory to respective destinations in either full truckload (FTL) or less than truckload (LTL) shipments. The Lagrangian-based heuristic shows the potential of better results in larger instances of the problem when compared with the results from the full MIP solved using the IBM CPLEX optimization solver.


81 pages




Northern Illinois University

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