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The traveling purchaser problem with stochastic prices: Exact and approximate algorithms

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  • Kang, Seungmo
  • Ouyang, Yanfeng
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    Abstract

    The paper formulates an extension of the traveling purchaser problem where multiple types of commodities are sold at spatially distributed locations with stochastic prices (each following a known probability distribution). A purchaser's goal is to find the optimal routing and purchasing strategies that minimize the expected total travel and purchasing costs needed to purchase one unit of each commodity. The purchaser reveals the actual commodity price at a seller upon arrival, and then either purchases the commodity at the offered price, or rejects the price and visits a next seller. In this paper, we propose an exact solution algorithm based on dynamic programming, an iterative approximate algorithm that yields bounds for the minimum total expected cost, and a greedy heuristic for fast solutions to large-scale applications. We analyze the characteristics of the problem and test the computational performance of the proposed algorithms. The numerical results show that the approximate and heuristic algorithms yield near-optimum strategies and very good estimates of the minimum total cost.

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    Bibliographic Info

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

    Volume (Year): 209 (2011)
    Issue (Month): 3 (March)
    Pages: 265-272

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    Handle: RePEc:eee:ejores:v:209:y:2011:i:3:p:265-272

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

    Related research

    Keywords: Traveling purchaser problem Stochastic price Dynamic programming Approximation Heuristic;

    References

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    1. Cyrus Derman & Gerald J. Lieberman & Sheldon M. Ross, 1972. "A Sequential Stochastic Assignment Problem," Management Science, INFORMS, vol. 18(7), pages 349-355, March.
    2. Leipala, Timo, 1978. "On the solutions of stochastic traveling salesman problems," European Journal of Operational Research, Elsevier, vol. 2(4), pages 291-297, July.
    3. Singh, Kashi N. & van Oudheusden, Dirk L., 1997. "A branch and bound algorithm for the traveling purchaser problem," European Journal of Operational Research, Elsevier, vol. 97(3), pages 571-579, March.
    4. Bianchi, Leonora & Campbell, Ann Melissa, 2007. "Extension of the 2-p-opt and 1-shift algorithms to the heterogeneous probabilistic traveling salesman problem," European Journal of Operational Research, Elsevier, vol. 176(1), pages 131-144, January.
    5. Snyder, Lawrence V. & Daskin, Mark S., 2006. "A random-key genetic algorithm for the generalized traveling salesman problem," European Journal of Operational Research, Elsevier, vol. 174(1), pages 38-53, October.
    6. Golden, Bruce & Levy, Larry & Dahl, Roy, 1981. "Two generalizations of the traveling salesman problem," Omega, Elsevier, vol. 9(4), pages 439-441.
    7. Renaud, Jacques & Boctor, Fayez F., 1998. "An efficient composite heuristic for the symmetric generalized traveling salesman problem," European Journal of Operational Research, Elsevier, vol. 108(3), pages 571-584, August.
    8. Bertsimas, Dimitris & Howell, Louis H., 1993. "Further results on the probabilistic traveling salesman problem," European Journal of Operational Research, Elsevier, vol. 65(1), pages 68-95, February.
    9. Jason D. Papastavrou & Srikanth Rajagopalan & Anton J. Kleywegt, 1996. "The Dynamic and Stochastic Knapsack Problem with Deadlines," Management Science, INFORMS, vol. 42(12), pages 1706-1718, December.
    10. Liu, Yu-Hsin, 2008. "Diversified local search strategy under scatter search framework for the probabilistic traveling salesman problem," European Journal of Operational Research, Elsevier, vol. 191(2), pages 332-346, December.
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