An efficient solution approach for solving the two-stage supply chain problem with fixed costs associated to the routes

In this paper, we are investigating the two-stage supply chain problem with fixed costs associated to the routes and propose an efficient heuristic algorithm for the minimization of the total transportation costs. Our novel heuristic algorithm is constructed to fit the challenges of the addressed supply chain optimization problem and starts with building several initial solutions by processing customers in a specific order and choosing the best available supply route for each customer. After each initial solution is built, a process of searching for better variants around that solution follows, restricting the way the transportation routes are chosen. We have performed computational experiments on two sets of instances: one that contains 20 benchmark instances existing in the literature and a second one that consists of 10 new randomly generated instances. The obtained computational results show that our proposed heuristic algorithm is highly competitive in comparison with the existing solution approaches from the literature.