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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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    References listed on IDEAS

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    1. 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.
    2. Hansen, Pierre & Mladenovic, Nenad, 2001. "Variable neighborhood search: Principles and applications," European Journal of Operational Research, Elsevier, vol. 130(3), pages 449-467, May.
    3. 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.
    4. 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.
    5. 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.
    6. S. Anily & A. Federgruen, 1990. "One Warehouse Multiple Retailer Systems with Vehicle Routing Costs," Management Science, INFORMS, vol. 36(1), pages 92-114, January.
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    Cited by:

    1. Sainathuni, Bhanuteja & Parikh, Pratik J. & Zhang, Xinhui & Kong, Nan, 2014. "The warehouse-inventory-transportation problem for supply chains," European Journal of Operational Research, Elsevier, vol. 237(2), pages 690-700.
    2. 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.
    3. Cheng, Chun & Qi, Mingyao & Wang, Xingyi & Zhang, Ying, 2016. "Multi-period inventory routing problem under carbon emission regulations," International Journal of Production Economics, Elsevier, vol. 182(C), pages 263-275.
    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. repec:eee:ejores:v:266:y:2018:i:2:p:487-497 is not listed on IDEAS
    6. 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.
    7. 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.
    8. 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.
    9. 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.

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