Investing in logistics facilities today to reduce routing emissions tomorrow

We investigate the trade-off between strategic investment in facilities and the long-term environmental impact of daily logistics operations. For that purpose, we consider a bi-objective location-routing problem with the objectives of minimising the cost of strategic investments such as locating facilities and acquiring different types of vehicles, and minimising pollution by using CO ₂ emissions as an indicator. A set of representative days of operations are used to estimate the long-term environmental impact. After modelling that problem as a mixed-integer program, we develop a decomposition approach that constructs routes, then uses them in a separate set covering model to generate complete solutions. The suitability of our approach is investigated on benchmark test instances as well as on a case study in the city of Vienna. Experiments show that our approach is a valuable tool in aiding such long-term decisions.