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Integration of inventory and transportation decisions in a logistics system

Author

Listed:
  • Zhao, Qiu hong
  • Chen, Shuang
  • Leung, Stephen C.H.
  • Lai, K.K.

Abstract

This paper addresses some of the challenges faced by a company which is responsible for delivering coal to its four subsidiaries situated along a river, through river hired or self-owned vessels. We propose to adopt a vendor managed inventory concept that involves establishment of a central warehouse at the port, and apply the Markov Decision Process (MDP) to formulate both ordering and delivery problems, considering different transportation modes, costs, and inventory issues. An efficient algorithm is developed for solving the MDP models. Our computational tests show that the proposed strategy can significantly reduce the overall system costs while maintaining smooth Just-in-Time supplies of coal to the subsidiaries.

Suggested Citation

  • Zhao, Qiu hong & Chen, Shuang & Leung, Stephen C.H. & Lai, K.K., 2010. "Integration of inventory and transportation decisions in a logistics system," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 46(6), pages 913-925, November.
  • Handle: RePEc:eee:transe:v:46:y:2010:i:6:p:913-925
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    Citations

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    Cited by:

    1. Gürler, Ülkü & Alp, Osman & Büyükkaramikli, Nasuh Çağdaş, 2014. "Coordinated inventory replenishment and outsourced transportation operations," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 70(C), pages 400-415.
    2. Niakan, Farzad & Rahimi, Mohammad, 2015. "A multi-objective healthcare inventory routing problem; a fuzzy possibilistic approach," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 80(C), pages 74-94.
    3. repec:eee:ejores:v:268:y:2018:i:1:p:314-324 is not listed on IDEAS
    4. Nguyen, H.N. & Rainwater, C.E. & Mason, S.J. & Pohl, E.A., 2014. "Quantity discount with freight consolidation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 66(C), pages 66-82.
    5. Sadeghi, Javad & Mousavi, Seyed Mohsen & Niaki, Seyed Taghi Akhavan & Sadeghi, Saeid, 2014. "Optimizing a bi-objective inventory model of a three-echelon supply chain using a tuned hybrid bat algorithm," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 70(C), pages 274-292.
    6. Tempelmeier, Horst & Bantel, Oliver, 2015. "Integrated optimization of safety stock and transportation capacity," European Journal of Operational Research, Elsevier, vol. 247(1), pages 101-112.

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