Abstract

This paper focuses on the problem of multi-order fulfillment and consolidation in e-Commerce retail (MOFCP). We examine a retailer that operates an online channel and a network of stores or warehouses. In this context, the term” store” is broadly used to refer to an individual physical store or a local warehouse. Customers can place orders containing multiple items through on-line platforms. The goal is to find the locations that fulfill each order and a consolidation point of each order such that the total transportation costs are minimized. To capture the economy of scale of the transportation costs, we model the transportation costs through piece-wise linear cost functions. We propose an integer programming formulation enhanced by valid inequalities, as well as a nested Variable Neighborhood Search heuristic. Through preliminary numerical experiments, we show that the heuristic has a 3.34 % average increase in costs compared to the MILP while it runs on average 6 times faster than the MILP.

Keywords: order consolidation, e-commerce, Nested VNS, multi order, heuristic