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A practical solution approach for the cyclic inventory routing problem

  • Raa, Birger
  • Aghezzaf, El-Houssaine
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    Vendor managed inventory (VMI) is an example of effective cooperation and partnering practices between up- and downstream stages in a supply chain. In VMI, the supplier takes the responsibility for replenishing his customers' inventories based on their consumption data, with the aim of optimizing the over all distribution and inventory costs throughout the supply chain. This paper discusses the challenging optimization problem that arises in this context, known as the inventory routing problem (IRP). The objective of this IRP problem is to determine a distribution plan that minimizes average distribution and inventory costs without causing any stock-out at the customers. Deterministic constant customer demand rates are assumed and therefore, a long-term cyclical approach is adopted, integrating fleet sizing, vehicle routing, and inventory management. Further, realistic side-constraints such as limited storage capacities, driving time restrictions and constant replenishment intervals are taken into account. A heuristic solution approach is proposed, analyzed and evaluated against a comparable state-of-the-art heuristic.

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

    Volume (Year): 192 (2009)
    Issue (Month): 2 (January)
    Pages: 429-441

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    Handle: RePEc:eee:ejores:v:192:y:2009:i:2:p:429-441
    Contact details of provider: Web page: http://www.elsevier.com/locate/eor

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    1. 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.
    2. 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.
    3. Anily, Shoshana, 1994. "The general multi-retailer EOQ problem with vehicle routing costs," European Journal of Operational Research, Elsevier, vol. 79(3), pages 451-473, December.
    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. Webb, Ian R. & Larson, Richard C., 1995. "Period and phase of customer replenishment: A new approach to the Strategic Inventory/Routing problem," European Journal of Operational Research, Elsevier, vol. 85(1), pages 132-148, August.
    6. Aghezzaf, El-Houssaine & Raa, Birger & Van Landeghem, Hendrik, 2006. "Modeling inventory routing problems in supply chains of high consumption products," European Journal of Operational Research, Elsevier, vol. 169(3), pages 1048-1063, March.
    7. Qu, Wendy W. & Bookbinder, James H. & Iyogun, Paul, 1999. "An integrated inventory-transportation system with modified periodic policy for multiple products," European Journal of Operational Research, Elsevier, vol. 115(2), pages 254-269, June.
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