A GRASP with Strategic Oscillation for a Commercial Territory Design Problem with a Routing Budget Constraint

This paper addresses a commercial districting problem arising in the bottled beverage distribution industry. The problem consists of grouping a set of city blocks into territories so as to maximize territory compactness. As planning requirements, the grouping seeks to balance both number of customers and product demand across territories, maintain connectivity of territories, and limit the total cost of routing. A combinatorial optimization model for this problem is introduced. Work on commercial territory design has particularly focused on design decisions. This work is, to the best of our knowledge, the first to address both design and routing decisions simultaneously by considering a budget constraint on the total routing cost in commercial territory design. A greedy randomized adaptive search procedure that incorporates advanced features such as adaptive memory and strategic oscillation is developed. Empirical evidence over a wide set of randomly generated instances based on real-world data show a very positive impact of these advanced components. Solution quality is significantly improved as well.