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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
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    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.

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    Bibliographic Info

    Article provided by Elsevier in its journal European Journal of Operational Research.

    Volume (Year): 191 (2008)
    Issue (Month): 3 (December)
    Pages: 623-635

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    Handle: RePEc:eee:ejores:v:191:y:2008:i:3:p:623-635

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    Web page: http://www.elsevier.com/locate/eor

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    References

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    1. Hansen, Pierre & Mladenovic, Nenad, 2001. "Variable neighborhood search: Principles and applications," European Journal of Operational Research, Elsevier, vol. 130(3), pages 449-467, May.
    2. Zhao, Qiu-Hong & Wang, Shou-Yang & Lai, K.K., 2007. "A partition approach to the inventory/routing problem," European Journal of Operational Research, Elsevier, vol. 177(2), pages 786-802, March.
    3. Robin Roundy, 1985. "98%-Effective Integer-Ratio Lot-Sizing for One-Warehouse Multi-Retailer Systems," Management Science, INFORMS, vol. 31(11), pages 1416-1430, November.
    4. S. Anily & A. Federgruen, 1990. "One Warehouse Multiple Retailer Systems with Vehicle Routing Costs," Management Science, INFORMS, vol. 36(1), pages 92-114, January.
    5. S. Viswanathan & Kamlesh Mathur, 1997. "Integrating Routing and Inventory Decisions in One-Warehouse Multiretailer Multiproduct Distribution Systems," Management Science, INFORMS, vol. 43(3), pages 294-312, March.
    6. Sila Çetinkaya & Chung-Yee Lee, 2000. "Stock Replenishment and Shipment Scheduling for Vendor-Managed Inventory Systems," Management Science, INFORMS, vol. 46(2), pages 217-232, February.
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    Cited by:
    1. 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.
    2. 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.

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