Abstract: Location of logistics nodes along the proposed railway is of great significance to provide logistics service because a lot of materials are required in a railway construction project. With the uncertainty of the material demand, a lateral transshipment strategy between two logistics nodes is applied to optimize the location of the logistics nodes and their corresponding service area, so as to control the logistics cost of the project. To minimize the total operation cost, a facility location-inventory model is developed with curved demand. On the basis of analyzing the properties of the model, an algorithm based on linear search is developed. The computational experiment shows that lateral transshipment induces to an increase of transshipment and transportation cost, together with more reduction of inventory cost. As a result, the total operation cost goes down. The optimal location of logistics nodes changes with lateral transshipment considered, and so does their corresponding service area.

Key words: curved demand, lateral transshipment, location