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Model and algorithm for inventory/routing decision in a three-echelon logistics system

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  • Zhao, Qiu-Hong
  • Chen, Shuang
  • Zang, Cun-Xun

Abstract

This paper addresses an integrated inventory and routing problem in a three-echelon logistics system, which consists of a supplier, a central warehouse and a group of retailers. The inventory decision of each member and the routing decision among members of the system are made simultaneously, with the objective of minimizing the overall average cost of the system. A strategy named fixed partition and power-of-two (FP-POT) is proposed for the considered problem and a variable large neighborhood search (VLNS) algorithm, which is a special case of variable neighborhood search (VNS) algorithm, is developed. The efficiency of the strategy as well as the algorithm is illustrated by comparing computational results with a lower bound. The advantage of the proposed VLNS algorithm is further shown by getting better results for the problems in a two-echelon logistics system, which have been solved by a Tabu Search algorithm recently.

Suggested Citation

  • Zhao, Qiu-Hong & Chen, Shuang & Zang, Cun-Xun, 2008. "Model and algorithm for inventory/routing decision in a three-echelon logistics system," European Journal of Operational Research, Elsevier, vol. 191(3), pages 623-635, December.
    • Handle: RePEc:eee:ejores:v:191:y:2008:i:3:p:623-635
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    4. Li, Kunpeng & Chen, Bin & Sivakumar, Appa Iyer & Wu, Yong, 2014. "An inventory–routing problem with the objective of travel time minimization," European Journal of Operational Research, Elsevier, vol. 236(3), pages 936-945.
    5. Ahmed Kheiri, 2020. "Heuristic Sequence Selection for Inventory Routing Problem," Transportation Science, INFORMS, vol. 54(2), pages 302-312, March.
    6. Liu, Tian & Luo, Zhixing & Qin, Hu & Lim, Andrew, 2018. "A branch-and-cut algorithm for the two-echelon capacitated vehicle routing problem with grouping constraints," European Journal of Operational Research, Elsevier, vol. 266(2), pages 487-497.
    7. Emre Çankaya & Ali Ekici & Okan Örsan Özener, 2019. "Humanitarian relief supplies distribution: an application of inventory routing problem," Annals of Operations Research, Springer, vol. 283(1), pages 119-141, December.
    8. Jafarian, Ahmad & Asgari, Nasrin & Mohri, Seyed Sina & Fatemi-Sadr, Elham & Farahani, Reza Zanjirani, 2019. "The inventory-routing problem subject to vehicle failure," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 126(C), pages 254-294.
    9. Diabat, Ali, 2014. "Hybrid algorithm for a vendor managed inventory system in a two-echelon supply chain," European Journal of Operational Research, Elsevier, vol. 238(1), pages 114-121.
    10. Mohd Kamarul Irwan Abdul Rahim & El-Houssaine Aghezzaf & Veronique Limère & Birger Raa, 2016. "Analysing the effectiveness of vendor-managed inventory in a single-warehouse, multiple-retailer system," International Journal of Systems Science, Taylor & Francis Journals, vol. 47(8), pages 1953-1965, June.
    11. Bradley Guthrie & Pratik J. Parikh & Nan Kong, 2017. "Evaluating warehouse strategies for two-product class distribution planning," International Journal of Production Research, Taylor & Francis Journals, vol. 55(21), pages 6470-6484, November.
    12. Li, Jianxiang & Chu, Feng & Chen, Haoxun, 2011. "A solution approach to the inventory routing problem in a three-level distribution system," European Journal of Operational Research, Elsevier, vol. 210(3), pages 736-744, May.
    13. Fokkema, Jan Eise & Land, Martin J. & Coelho, Leandro C. & Wortmann, Hans & Huitema, George B., 2020. "A continuous-time supply-driven inventory-constrained routing problem," Omega, Elsevier, vol. 92(C).
    14. Ali Ekici & Okan Örsan Özener & Gültekin Kuyzu, 2015. "Cyclic Delivery Schedules for an Inventory Routing Problem," Transportation Science, INFORMS, vol. 49(4), pages 817-829, November.
    15. Cheng, Chun & Yang, Peng & Qi, Mingyao & Rousseau, Louis-Martin, 2017. "Modeling a green inventory routing problem with a heterogeneous fleet," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 97(C), pages 97-112.
    16. Li, Jianxiang & Chen, Haoxun & Chu, Feng, 2010. "Performance evaluation of distribution strategies for the inventory routing problem," European Journal of Operational Research, Elsevier, vol. 202(2), pages 412-419, April.
    17. Pierre Hansen & Nenad Mladenović & José Moreno Pérez, 2010. "Variable neighbourhood search: methods and applications," Annals of Operations Research, Springer, vol. 175(1), pages 367-407, March.
    18. Bolduc, Marie-Claude & Laporte, Gilbert & Renaud, Jacques & Boctor, Fayez F., 2010. "A tabu search heuristic for the split delivery vehicle routing problem with production and demand calendars," European Journal of Operational Research, Elsevier, vol. 202(1), pages 122-130, April.
    19. Sonntag, Danja R. & Schrotenboer, Albert H. & Kiesmüller, Gudrun P., 2023. "Stochastic inventory routing with time-based shipment consolidation," European Journal of Operational Research, Elsevier, vol. 306(3), pages 1186-1201.
    20. Leandro C. Coelho & Jean-François Cordeau & Gilbert Laporte, 2014. "Thirty Years of Inventory Routing," Transportation Science, INFORMS, vol. 48(1), pages 1-19, February.

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