Model and algorithm for bilevel multisized terminal location‐routing problem for the last mile delivery

Abstract

Abstract The last mile delivery is regarded as one of the most expensive but least efficient stretches in the business‐to‐customer supply chain. Designing the last mile delivery system in a lean way is crucial to serve customers efficiently and economically. To address this issue, we propose a bilevel multisized terminal location‐routing problem (BL‐MSTLRP) with simultaneous home delivery and customer's pickup services. The solution method is proposed by combining genetic algorithm (GA) and simulated annealing (SA), called self‐adaptive SGA. Studies for designing the last mile delivery system in a real‐world environment indicate the validity of the proposed model based on the comparison of different scenarios. Numerical experiments are also conducted to evaluate the performance of the presented SGA. Computational results show that the hybrid approach efficiently solves the BL‐MSTLRP.