A Two-Echelon Location-Routing Problem for Optimizing Agro-Logistics and Sustainability Enhancement

Abstract

Contract farming is a modern agribusiness model that has recently been adopted to improve agro-logistics efficiency. The major characteristic of this model is that agricultural products can be supplied directly to the retailers to satisfy their requirements for safe and fresh products. However, as most farms are small-scale and located far from urban areas, the previous method of dispatching vehicles in a single-echelon system from each farm not only consumes a lot of energy and pollutes the environment, but also reduces the income of farmers by paying higher transportation costs as the price of fuel rises. Therefore, to improve the sustainability and feasibility of contract farming transportation, this paper proposes a two-echelon location-routing problem (2E-LRP) to determine the intermediary station locations and routing decisions within the two-echelon system. The objective of the problem is to minimize the total carbon emissions while considering practical environmental constraints including the capacity of facilities and vehicles, agricultural products the impact of the route types and the distance of transportation on the fuel consumption. In addition, an elitism-based genetic algorithm (EGA) is proposed to solve the problem and it is compared with other metaheuristic algorithms. The results show that the proposed EGA can efficiently generate high-quality solutions in test instances of varying scales.