IDEAS home Printed from https://ideas.repec.org/a/inm/ortrsc/v36y2002i1p94-118.html
   My bibliography  Save this article

The Stochastic Inventory Routing Problem with Direct Deliveries

Author

Listed:
  • Anton J. Kleywegt

    (School of Industrial and Systems Engineering, Georgia Institute of Technology, Atlanta, Georgia 30332-0205)

  • Vijay S. Nori

    (School of Industrial and Systems Engineering, Georgia Institute of Technology, Atlanta, Georgia 30332-0205)

  • Martin W. P. Savelsbergh

    (School of Industrial and Systems Engineering, Georgia Institute of Technology, Atlanta, Georgia 30332-0205)

Abstract

Vendor managed inventory replenishment is a business practice in which vendors monitor their customers' inventories, and decide when and how much inventory should be replenished. The inventory routing problem addresses the coordination of inventory management and transportation. The ability to solve the inventory routing problem contributes to the realization of the potential savings in inventory and transportation costs brought about by vendor managed inventory replenishment. The inventory routing problem is hard, especially if a large number of customers is involved. We formulate the inventory routing problem as a Markov decision process, and we propose approximation methods to find good solutions with reasonable computational effort. Computational results are presented for the inventory routing problem with direct deliveries.

Suggested Citation

  • Anton J. Kleywegt & Vijay S. Nori & Martin W. P. Savelsbergh, 2002. "The Stochastic Inventory Routing Problem with Direct Deliveries," Transportation Science, INFORMS, vol. 36(1), pages 94-118, February.
    • Handle: RePEc:inm:ortrsc:v:36:y:2002:i:1:p:94-118
    DOI: 10.1287/trsc.36.1.94.574
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/trsc.36.1.94.574
    Download Restriction: no
    File URL: https://libkey.io/10.1287/trsc.36.1.94.574?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Lawrence D. Burns & Randolph W. Hall & Dennis E. Blumenfeld & Carlos F. Daganzo, 1985. "Distribution Strategies that Minimize Transportation and Inventory Costs," Operations Research, INFORMS, vol. 33(3), pages 469-490, June.
    2. Dror, Moshe & Trudeau, Pierre, 1996. "Cash flow optimization in delivery scheduling," European Journal of Operational Research, Elsevier, vol. 88(3), pages 504-515, February.
    3. Guillermo Gallego & David Simchi-Levi, 1990. "On the Effectiveness of Direct Shipping Strategy for the One-Warehouse Multi-Retailer R-Systems," Management Science, INFORMS, vol. 36(2), pages 240-243, February.
    4. Marielle Christiansen & Bjorn Nygreen, 1998. "A method for solving ship routing problemswith inventory constraints," Annals of Operations Research, Springer, vol. 81(0), pages 357-378, June.
    5. Pyke, David F. & Cohen, Morris A., 1993. "Performance characteristics of stochastic integrated production-distribution systems," European Journal of Operational Research, Elsevier, vol. 68(1), pages 23-48, July.
    6. S. Anily & A. Federgruen, 1993. "Two-Echelon Distribution Systems with Vehicle Routing Costs and Central Inventories," Operations Research, INFORMS, vol. 41(1), pages 37-47, February.
    7. Julian Benjamin, 1989. "An Analysis of Inventory and Transportation Costs in a Constrained Network," Transportation Science, INFORMS, vol. 23(3), pages 177-183, August.
    8. Barnes-Schuster, Dawn & Bassok, Yehuda, 1997. "Direct shipping and the dynamic single-depot/multi-retailer inventory system," European Journal of Operational Research, Elsevier, vol. 101(3), pages 509-518, September.
    9. Barry L. Nelson & Frank J. Matejcik, 1995. "Using Common Random Numbers for Indifference-Zone Selection and Multiple Comparisons in Simulation," Management Science, INFORMS, vol. 41(12), pages 1935-1945, December.
    10. Martin I. Reiman & Rodrigo Rubio & Lawrence M. Wein, 1999. "Heavy Traffic Analysis of the Dynamic Stochastic Inventory-Routing Problem," Transportation Science, INFORMS, vol. 33(4), pages 361-380, November.
    11. 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.
    12. Moshe Dror & Michael Ball, 1987. "Inventory/routing: Reduction from an annual to a short‐period problem," Naval Research Logistics (NRL), John Wiley & Sons, vol. 34(6), pages 891-905, December.
    13. Blumenfeld, Dennis E. & Burns, Lawrence D. & Daganzo, Carlos F., 1991. "Synchronizing production and transportation schedules," Transportation Research Part B: Methodological, Elsevier, vol. 25(1), pages 23-37, February.
    14. T. William Chien & Anantaram Balakrishnan & Richard T. Wong, 1989. "An Integrated Inventory Allocation and Vehicle Routing Problem," Transportation Science, INFORMS, vol. 23(2), pages 67-76, May.
    15. S. Anily & A. Federgruen, 1990. "One Warehouse Multiple Retailer Systems with Vehicle Routing Costs," Management Science, INFORMS, vol. 36(1), pages 92-114, January.
    16. Marielle Christiansen, 1999. "Decomposition of a Combined Inventory and Time Constrained Ship Routing Problem," Transportation Science, INFORMS, vol. 33(1), pages 3-16, February.
    17. Chandra, Pankaj & Fisher, Marshall L., 1994. "Coordination of production and distribution planning," European Journal of Operational Research, Elsevier, vol. 72(3), pages 503-517, February.
    18. Pierre Trudeau & Moshe Dror, 1992. "Stochastic Inventory Routing: Route Design with Stockouts and Route Failures," Transportation Science, INFORMS, vol. 26(3), pages 171-184, August.
    19. Blumenfeld, Dennis E. & Burns, Lawrence D. & Diltz, J. David & Daganzo, Carlos F., 1985. "Analyzing trade-offs between transportation, inventory and production costs on freight networks," Transportation Research Part B: Methodological, Elsevier, vol. 19(5), pages 361-380, October.
    20. Alan S. Minkoff, 1993. "A Markov Decision Model and Decomposition Heuristic for Dynamic Vehicle Dispatching," Operations Research, INFORMS, vol. 41(1), pages 77-90, February.
    21. Thomas, Douglas J. & Griffin, Paul M., 1996. "Coordinated supply chain management," European Journal of Operational Research, Elsevier, vol. 94(1), pages 1-15, October.
    22. Pyke, David F. & Cohen, Morris A., 1994. "Multiproduct integrated production--distribution systems," European Journal of Operational Research, Elsevier, vol. 74(1), pages 18-49, April.
    23. Jonathan F. Bard & Liu Huang & Patrick Jaillet & Moshe Dror, 1998. "A Decomposition Approach to the Inventory Routing Problem with Satellite Facilities," Transportation Science, INFORMS, vol. 32(2), pages 189-203, May.
    24. Marielle Christiansen & Bjørn Nygreen, 1998. "Modelling path flows for a combined ship routingand inventory management problem," Annals of Operations Research, Springer, vol. 82(0), pages 391-413, August.
    25. M. Haimovich & A. H. G. Rinnooy Kan, 1985. "Bounds and Heuristics for Capacitated Routing Problems," Mathematics of Operations Research, INFORMS, vol. 10(4), pages 527-542, November.
    26. F. Fumero & C. Vercellis, 1999. "Synchronized Development of Production, Inventory, and Distribution Schedules," Transportation Science, INFORMS, vol. 33(3), pages 330-340, August.
    27. Chien, T. William, 1993. "Determining profit-maximizing production/shipping policies in a one-to-one direct shipping, stochastic demand environment," European Journal of Operational Research, Elsevier, vol. 64(1), pages 83-102, January.
    28. Steven Nahmias & Stephen A. Smith, 1994. "Optimizing Inventory Levels in a Two-Echelon Retailer System with Partial Lost Sales," Management Science, INFORMS, vol. 40(5), pages 582-596, May.
    29. Walter J. Bell & Louis M. Dalberto & Marshall L. Fisher & Arnold J. Greenfield & R. Jaikumar & Pradeep Kedia & Robert G. Mack & Paul J. Prutzman, 1983. "Improving the Distribution of Industrial Gases with an On-Line Computerized Routing and Scheduling Optimizer," Interfaces, INFORMS, vol. 13(6), pages 4-23, December.
    30. Philip Kaminsky & David Simchi-Levi, 1998. "Probabilistic Analysis and Practical Algorithms for the Flow Shop Weighted Completion Time Problem," Operations Research, INFORMS, vol. 46(6), pages 872-882, December.
    31. Awi Federgruen & Paul Zipkin, 1984. "A Combined Vehicle Routing and Inventory Allocation Problem," Operations Research, INFORMS, vol. 32(5), pages 1019-1037, October.
    32. Morris A. Cohen & Hau L. Lee, 1988. "Strategic Analysis of Integrated Production-Distribution Systems: Models and Methods," Operations Research, INFORMS, vol. 36(2), pages 216-228, April.
    33. Lap Mui Ann Chan & Awi Federgruen & David Simchi-Levi, 1998. "Probabilistic Analyses and Practical Algorithms for Inventory-Routing Models," Operations Research, INFORMS, vol. 46(1), pages 96-106, February.
    34. Yehuda Bassok & Ricardo Ernst, 1995. "Dynamic Allocations for Multi-Product Distribution," Transportation Science, INFORMS, vol. 29(3), pages 256-266, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Anton J. Kleywegt & Vijay S. Nori & Martin W. P. Savelsbergh, 2004. "Dynamic Programming Approximations for a Stochastic Inventory Routing Problem," Transportation Science, INFORMS, vol. 38(1), pages 42-70, February.
    2. Leandro C. Coelho & Jean-François Cordeau & Gilbert Laporte, 2014. "Thirty Years of Inventory Routing," Transportation Science, INFORMS, vol. 48(1), pages 1-19, February.
    3. Jin-Hwa Song & Martin Savelsbergh, 2007. "Performance Measurement for Inventory Routing," Transportation Science, INFORMS, vol. 41(1), pages 44-54, February.
    4. Baita, Flavio & Ukovich, Walter & Pesenti, Raffaele & Favaretto, Daniela, 1998. "Dynamic routing-and-inventory problems: a review," Transportation Research Part A: Policy and Practice, Elsevier, vol. 32(8), pages 585-598, November.
    5. Patrick Jaillet & Jonathan F. Bard & Liu Huang & Moshe Dror, 2002. "Delivery Cost Approximations for Inventory Routing Problems in a Rolling Horizon Framework," Transportation Science, INFORMS, vol. 36(3), pages 292-300, August.
    6. Mosca, Alyssa & Vidyarthi, Navneet & Satir, Ahmet, 2019. "Integrated transportation – inventory models: A review," Operations Research Perspectives, Elsevier, vol. 6(C).
    7. Vishal Gaur & Marshall L. Fisher, 2004. "A Periodic Inventory Routing Problem at a Supermarket Chain," Operations Research, INFORMS, vol. 52(6), pages 813-822, December.
    8. N H Moin & S Salhi, 2007. "Inventory routing problems: a logistical overview," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 58(9), pages 1185-1194, September.
    9. Paweł Hanczar, 2014. "Solving IRP using location based heuristics," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 24(2), pages 81-96.
    10. Oğuz Solyalı & Haldun Süral, 2011. "A Branch-and-Cut Algorithm Using a Strong Formulation and an A Priori Tour-Based Heuristic for an Inventory-Routing Problem," Transportation Science, INFORMS, vol. 45(3), pages 335-345, August.
    11. Kai-Leung Yung & Jiafu Tang & Andrew W. H. Ip & Dingwei Wang, 2006. "Heuristics for Joint Decisions in Production, Transportation, and Order Quantity," Transportation Science, INFORMS, vol. 40(1), pages 99-116, February.
    12. 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).
    13. 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.
    14. 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.
    15. Jaeheon Jung & Kamlesh Mathur, 2007. "An Efficient Heuristic Algorithm for a Two-Echelon Joint Inventory and Routing Problem," Transportation Science, INFORMS, vol. 41(1), pages 55-73, February.
    16. Luca Bertazzi, 2008. "Analysis of Direct Shipping Policies in an Inventory-Routing Problem with Discrete Shipping Times," Management Science, INFORMS, vol. 54(4), pages 748-762, April.
    17. 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.
    18. Herer, Yale T. & Levy, Roberto, 1997. "The Metered Inventory Routing Problem, an integrative heuristic algorithm," International Journal of Production Economics, Elsevier, vol. 51(1-2), pages 69-81, August.
    19. Oğuz Solyalı & Jean-François Cordeau & Gilbert Laporte, 2012. "Robust Inventory Routing Under Demand Uncertainty," Transportation Science, INFORMS, vol. 46(3), pages 327-340, August.
    20. Thomas, Douglas J. & Griffin, Paul M., 1996. "Coordinated supply chain management," European Journal of Operational Research, Elsevier, vol. 94(1), pages 1-15, October.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ortrsc:v:36:y:2002:i:1:p:94-118. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.