The cross-docking process, which can function as an efficient logistics strategy, includes three operations, namely receiving products from inbound vehicles, consolidating the products into groups according to their destinations, and shipping them on outbound vehicles. This process should be performed with minimum storage between operations. This paper presents a model that considers two-level vehicle routing together with cross-docking. By considering the transportation costs and the fact that a given product type may be supplied by different suppliers at different prices, the routing of inbound vehicles between cross-docks and suppliers in the pickup process and the routing of outbound vehicles between cross-docks and retailers in the delivery process are determined. The goal is to assign products to suppliers and cross-docks, to optimize the routes and schedules of inbound and outbound vehicles, and to consolidate products so that the sum of the purchasing, transportation and holding costs is minimized. A hybrid genetic algorithm is developed for the problem, and the algorithm performance is validated by several numerical examples.
