A Network Optimization Model for a Candy Supply Chain

We introduce a model for optimizing transportation modes (direct vs. LTL), distribution center locations, truck routing, and the timing of shipments throughout a supply chain. Our model is motivated by and applied to a network optimization problem faced by a medium-sized candy company. The problem at hand has elements of facility location, vehicle routing, and fixed-charge network design problems but cannot be cast as a special case of any of these. Instead, we formulate the model as a mixed-integer programming (MIP) problem and introduce several valid inequalities that strengthen the LP relaxation. We present computational results on real-world instances and discuss the qualitative results suggested by the solution.