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Dynamic Allocations for Multi-Product Distribution

Author

Listed:
  • Yehuda Bassok

    (Department of Industrial Engineering and Management Sciences, Northwestern University, Evanston, Illinois 60208)

  • Ricardo Ernst

    (School of Business Administration, Georgetown University, Washington, District of Columbia 20057)

Abstract

Consider the problem of allocating multiple products by a distributor with limited capacity (truck size), who has a fixed sequence of customers (retailers) whose demands are unknown. Each time the distributor visits a customer, he gets information about the realization of the demand for this customer, but he does not yet know the demands of the following customers. The decision faced by the distributor is how much to allocate to each customer given that the penalties for not satisfying demand are not identical. In addition, we optimally solve the problem of loading the truck with the multiple products, given the limited storage capacity. This framework can also be used for the general problem of seat allocation in the airline industry. As with the truck in the distribution problem, the airplane has limited capacity. A critical decision is how to allocate the available seats between early and late reservations (sequence of customers), for the different fare classes (multiple products), where the revenues from discount (early) and regular (late) passengers are different.

Suggested Citation

  • Yehuda Bassok & Ricardo Ernst, 1995. "Dynamic Allocations for Multi-Product Distribution," Transportation Science, INFORMS, vol. 29(3), pages 256-266, August.
    • Handle: RePEc:inm:ortrsc:v:29:y:1995:i:3:p:256-266
    DOI: 10.1287/trsc.29.3.256
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    Citations

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    Cited by:

    1. 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.
    2. Youyi Feng & Baichun Xiao, 2000. "Optimal Policies of Yield Management with Multiple Predetermined Prices," Operations Research, INFORMS, vol. 48(2), pages 332-343, April.
    3. Leroy B. Schwarz & James E. Ward & Xin Zhai, 2006. "On the Interactions Between Routing and Inventory-Management Policies in a One-Warehouse N-Retailer Distribution System," Manufacturing & Service Operations Management, INFORMS, vol. 8(3), pages 253-272, September.
    4. Zhai, Xin & Ward, James E. & Schwarz, Leroy B., 2011. "Coordinating a one-warehouse N-retailer distribution system under retailer-reporting," International Journal of Production Economics, Elsevier, vol. 134(1), pages 204-211, November.
    5. Feng, Youyi & Xiao, Baichun, 2006. "Integration of pricing and capacity allocation for perishable products," European Journal of Operational Research, Elsevier, vol. 168(1), pages 17-34, January.
    6. Moon, Ilkyeong & Feng, Xuehao, 2017. "Supply chain coordination with a single supplier and multiple retailers considering customer arrival times and route selection," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 106(C), pages 78-97.
    7. Milind Dawande & Srinagesh Gavirneni & Mili Mehrotra & Vijay Mookerjee, 2013. "Efficient Distribution of Water Between Head-Reach and Tail-End Farms in Developing Countries," Manufacturing & Service Operations Management, INFORMS, vol. 15(2), pages 221-238, May.
    8. Bertazzi, Luca & Bosco, Adamo & Laganà, Demetrio, 2015. "Managing stochastic demand in an Inventory Routing Problem with transportation procurement," Omega, Elsevier, vol. 56(C), pages 112-121.
    9. Robert W. Lien & Seyed M. R. Iravani & Karen R. Smilowitz, 2014. "Sequential Resource Allocation for Nonprofit Operations," Operations Research, INFORMS, vol. 62(2), pages 301-317, April.
    10. Jin-Hwa Song & Martin Savelsbergh, 2007. "Performance Measurement for Inventory Routing," Transportation Science, INFORMS, vol. 41(1), pages 44-54, February.
    11. 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.

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