Distribution centers (DCs) typically receive orders from the customers (mostly retail stores) located in its vicinity; and deliver the ordered goods in the next day morning. To maintain high item fill rate, DCs have to hold a high level of inventory, which will increase inventory cost. As an alternative, cross-filling is that, after closing the daily order receipt, DCs exchange surplus items during the night to reduce the shortage. The economic justification of such cross-filling will depend on the trade-o_x001B_ between extra transshipment and handling cost versus saved shortage cost. In this paper, as an extension of Rim and Jiang [1], vehicles are allowed to drop and pickup items at the intermediate DCs in the route. We present a genetic algorithm to determine the routes and amount to pickup/drop at each DC to minimize the total cost.
