optimization techniques, most frequently intelligent algorithms
(Miranda & Garrido, 2009; Syarif et al., 2002; Thanh et al., 2012).
It is assumed in standard models that inventory costs are independent
of the network design. We integrated the inventory cost as
well as the retail strategy into the logistics network design with
hub location. The problem is detailed as follows.
As shown in Fig. 1, consider K retailers who sell identical commodity
supplied from I different suppliers. Each supplier provides
the retailer with identical commodity at a wholesale unit price. Assume
that the customer at each retailer has uncertain demand with
the known probability distribution. For retailer k, its objective is
determining the optimal order quantity during the decisionmaking
period. After each retailer order Qk commodities from the
supplier, the commodities would be transported directly from the
i suppliers via a distribution center (DC) then to the retailer. During
this process, the supplier would be involved in the following strategic
planning issues: (1) determine which DC should be selected as
the hub to reprocess the goods; (2) assign the commodity flow on
the logistics network. That is, determine the commodity flow transported
on the logistics network, xijk, which denote the amount of
commodities transported from a supplier i to retailer k via DC (or)
hub j; (3) determine different wholesale prices of the commodity
to different retailers.
In general, some of the most important decisions in our model
are as follows: