Design and analysis of a satellite network with direct delivery in the pharmaceutical industry

Creating and maintaining an efficient distribution network is essential for companies in the modern pharmaceutical industry. Medicine delivery usually takes place via depots and/or satellites, and the proposed model for assessing the issue determines the facility and routing decisions simultaneously. We develop a technique that iterates between an upper bound and a lower bound, based on a blended Lagrangian relaxation branch-and-cut approach where we exploit separability and linearity. We conducted computational experiments on real-life instances from the Dutch pharmaceutical industry distribution network. We show that the solution method can provide solutions for real-life cases within reasonable time windows.