IDEAS home Printed from https://ideas.repec.org/a/inm/ortrsc/v52y2018i3p526-546.html
   My bibliography  Save this article

Stochastic Inventory Routing for Perishable Products

Author

Listed:
  • Yves Crama

    (HEC Management School, University of Liège, 4000 Liège, Belgium)

  • Mahmood Rezaei

    (HEC Management School, University of Liège, 4000 Liège, Belgium)

  • Martin Savelsbergh

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

  • Tom Van Woensel

    (School of Industrial Engineering, Eindhoven University of Technology, 5612 AZ Eindhoven, Netherlands)

Abstract

Different solution methods are developed to solve an inventory routing problem for a perishable product with stochastic demands. The solution methods are empirically compared in terms of average profit, service level, and actual freshness. The benefits of explicitly considering demand uncertainty are quantified. The computational study highlights that in certain situations although a simple ordering policy can achieve very good performance, statistically and economically significant improvements are achieved when using more advanced solution methods. Managerial insights concerning the impact of shelf life and store capacity on profit are also obtained.

Suggested Citation

  • Yves Crama & Mahmood Rezaei & Martin Savelsbergh & Tom Van Woensel, 2018. "Stochastic Inventory Routing for Perishable Products," Transportation Science, INFORMS, vol. 52(3), pages 526-546, June.
    • Handle: RePEc:inm:ortrsc:v:52:y:2018:i:3:p:526-546
    DOI: 10.1287/trsc.2017.0799
    as

    Download full text from publisher

    File URL: https://doi.org/10.1287/trsc.2017.0799
    Download Restriction: no
    File URL: https://libkey.io/10.1287/trsc.2017.0799?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. Oded Berman & Richard C. Larson, 2001. "Deliveries in an Inventory/Routing Problem Using Stochastic Dynamic Programming," Transportation Science, INFORMS, vol. 35(2), pages 192-213, May.
    2. 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.
    3. Steven Nahmias, 2011. "Perishable Inventory Systems," International Series in Operations Research and Management Science, Springer, edition 1, number 978-1-4419-7999-5, September.
    4. Kouki, Chaaben & Jouini, Oualid, 2015. "On the effect of lifetime variability on the performance of inventory systems," International Journal of Production Economics, Elsevier, vol. 167(C), pages 23-34.
    5. William L. Cooper, 2001. "Pathwise Properties and Performance Bounds for a Perishable Inventory System," Operations Research, INFORMS, vol. 49(3), pages 455-466, June.
    6. 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.
    7. 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.
    8. 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.
    9. Christiansen, Marielle & Fagerholt, Kjetil & Flatberg, Truls & Haugen, Øyvind & Kloster, Oddvar & Lund, Erik H., 2011. "Maritime inventory routing with multiple products: A case study from the cement industry," European Journal of Operational Research, Elsevier, vol. 208(1), pages 86-94, January.
    10. 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.
    11. Daniel Adelman, 2004. "A Price-Directed Approach to Stochastic Inventory/Routing," Operations Research, INFORMS, vol. 52(4), pages 499-514, August.
    12. 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.
    13. Awi Federgruen & Gregory Prastacos & Paul H. Zipkin, 1986. "An Allocation and Distribution Model for Perishable Products," Operations Research, INFORMS, vol. 34(1), pages 75-82, February.
    14. Guy Desaulniers & Jørgen G. Rakke & Leandro C. Coelho, 2016. "A Branch-Price-and-Cut Algorithm for the Inventory-Routing Problem," Transportation Science, INFORMS, vol. 50(3), pages 1060-1076, August.
    15. Chiu, Huan Neng, 1995. "A heuristic (R, T) periodic review perishable inventory model with lead times," International Journal of Production Economics, Elsevier, vol. 42(1), pages 1-15, November.
    16. 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.
    17. Alegre, Jesus & Laguna, Manuel & Pacheco, Joaquin, 2007. "Optimizing the periodic pick-up of raw materials for a manufacturer of auto parts," European Journal of Operational Research, Elsevier, vol. 179(3), pages 736-746, June.
    18. 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.
    19. Yugang Yu & Chengbin Chu & Haoxun Chen & Feng Chu, 2012. "Large scale stochastic inventory routing problems with split delivery and service level constraints," Annals of Operations Research, Springer, vol. 197(1), pages 135-158, August.
    20. Adachi, Yasuo & Nose, Toyokazu & Kuriyama, Sennosuke, 1999. "Optimal inventory control policy subject to different selling prices of perishable commodities," International Journal of Production Economics, Elsevier, vol. 60(1), pages 389-394, April.
    21. 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.
    22. 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.
    23. Luca Bertazzi & Giuseppe Paletta & M. Grazia Speranza, 2002. "Deterministic Order-Up-To Level Policies in an Inventory Routing Problem," Transportation Science, INFORMS, vol. 36(1), pages 119-132, February.
    24. Roar Grønhaug & Marielle Christiansen & Guy Desaulniers & Jacques Desrosiers, 2010. "A Branch-and-Price Method for a Liquefied Natural Gas Inventory Routing Problem," Transportation Science, INFORMS, vol. 44(3), pages 400-415, August.
    25. Borga Deniz & Itir Karaesmen & Alan Scheller-Wolf, 2010. "Managing Perishables with Substitution: Inventory Issuance and Replenishment Heuristics," Manufacturing & Service Operations Management, INFORMS, vol. 12(2), pages 319-329, July.
    26. Kouki, Chaaben & Jemaï, Zied & Minner, Stefan, 2015. "A lost sales (r, Q) inventory control model for perishables with fixed lifetime and lead time," International Journal of Production Economics, Elsevier, vol. 168(C), pages 143-157.
    27. 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.
    28. Awi Federgruen & Paul Zipkin, 1984. "A Combined Vehicle Routing and Inventory Allocation Problem," Operations Research, INFORMS, vol. 32(5), pages 1019-1037, October.
    29. Okan Örsan Özener & Özlem Ergun & Martin Savelsbergh, 2013. "Allocating Cost of Service to Customers in Inventory Routing," Operations Research, INFORMS, vol. 61(1), pages 112-125, February.
    30. Z. Lian & L. Liu, 1999. "A discrete‐time model for perishable inventory systems," Annals of Operations Research, Springer, vol. 87(0), pages 103-116, April.
    31. Goyal, S. K. & Giri, B. C., 2001. "Recent trends in modeling of deteriorating inventory," European Journal of Operational Research, Elsevier, vol. 134(1), pages 1-16, October.
    32. Huang, Shan-Huen & Lin, Pei-Chun, 2010. "A modified ant colony optimization algorithm for multi-item inventory routing problems with demand uncertainty," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 46(5), pages 598-611, September.
    33. Ali Ekici & Okan Örsan Özener & Gültekin Kuyzu, 2015. "Cyclic Delivery Schedules for an Inventory Routing Problem," Transportation Science, INFORMS, vol. 49(4), pages 817-829, November.
    34. 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.
    35. Leandro C. Coelho & Jean-François Cordeau & Gilbert Laporte, 2014. "Thirty Years of Inventory Routing," Transportation Science, INFORMS, vol. 48(1), pages 1-19, February.
    36. 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.
    37. Xiuli Chao & Xiting Gong & Cong Shi & Huanan Zhang, 2015. "Approximation Algorithms for Perishable Inventory Systems," Operations Research, INFORMS, vol. 63(3), pages 585-601, June.
    38. Marius M. Solomon, 1987. "Algorithms for the Vehicle Routing and Scheduling Problems with Time Window Constraints," Operations Research, INFORMS, vol. 35(2), pages 254-265, April.
    39. Claudia Archetti & Luca Bertazzi & Gilbert Laporte & Maria Grazia Speranza, 2007. "A Branch-and-Cut Algorithm for a Vendor-Managed Inventory-Routing Problem," Transportation Science, INFORMS, vol. 41(3), pages 382-391, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Song, Ruidian & Zhao, Lei & Van Woensel, Tom & Fransoo, Jan C., 2019. "Coordinated delivery in urban retail," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 126(C), pages 122-148.
    2. Li, Yantong & Chu, Feng & Côté, Jean-François & Coelho, Leandro C. & Chu, Chengbin, 2020. "The multi-plant perishable food production routing with packaging consideration," International Journal of Production Economics, Elsevier, vol. 221(C).
    3. Vidal, Thibaut & Laporte, Gilbert & Matl, Piotr, 2020. "A concise guide to existing and emerging vehicle routing problem variants," European Journal of Operational Research, Elsevier, vol. 286(2), pages 401-416.
    4. A. Mor & M. G. Speranza, 2020. "Vehicle routing problems over time: a survey," 4OR, Springer, vol. 18(2), pages 129-149, June.
    5. Liu, Wenqian & Ke, Ginger Y. & Chen, Jian & Zhang, Lianmin, 2020. "Scheduling the distribution of blood products: A vendor-managed inventory routing approach," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 140(C).
    6. Nikzad, Erfaneh & Bashiri, Mahdi & Abbasi, Babak, 2021. "A matheuristic algorithm for stochastic home health care planning," European Journal of Operational Research, Elsevier, vol. 288(3), pages 753-774.
    7. Alvarez, Aldair & Cordeau, Jean-François & Jans, Raf & Munari, Pedro & Morabito, Reinaldo, 2021. "Inventory routing under stochastic supply and demand," Omega, Elsevier, vol. 102(C).
    8. 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.
    9. Alvarez, Aldair & Cordeau, Jean-François & Jans, Raf & Munari, Pedro & Morabito, Reinaldo, 2020. "Formulations, branch-and-cut and a hybrid heuristic algorithm for an inventory routing problem with perishable products," European Journal of Operational Research, Elsevier, vol. 283(2), pages 511-529.
    10. A. Mor & M. G. Speranza, 2022. "Vehicle routing problems over time: a survey," Annals of Operations Research, Springer, vol. 314(1), pages 255-275, July.
    11. Song, Yang & Fan, Tijun & Tang, Yuewu & Xu, Chang, 2021. "Omni-channel strategies for fresh produce with extra losses in-store," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 148(C).

    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. Leandro C. Coelho & Jean-François Cordeau & Gilbert Laporte, 2014. "Thirty Years of Inventory Routing," Transportation Science, INFORMS, vol. 48(1), pages 1-19, February.
    2. Cárdenas-Barrón, Leopoldo Eduardo & González-Velarde, José Luis & Treviño-Garza, Gerardo & Garza-Nuñez, Dagoberto, 2019. "Heuristic algorithm based on reduce and optimize approach for a selective and periodic inventory routing problem in a waste vegetable oil collection environment," International Journal of Production Economics, Elsevier, vol. 211(C), pages 44-59.
    3. 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.
    4. Song, Ruidian & Zhao, Lei & Van Woensel, Tom & Fransoo, Jan C., 2019. "Coordinated delivery in urban retail," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 126(C), pages 122-148.
    5. Ali Ekici & Okan Örsan Özener & Gültekin Kuyzu, 2015. "Cyclic Delivery Schedules for an Inventory Routing Problem," Transportation Science, INFORMS, vol. 49(4), pages 817-829, November.
    6. Jafarian, Ahmad & Asgari, Nasrin & Mohri, Seyed Sina & Fatemi-Sadr, Elham & Farahani, Reza Zanjirani, 2019. "The inventory-routing problem subject to vehicle failure," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 126(C), pages 254-294.
    7. Jin-Hwa Song & Martin Savelsbergh, 2007. "Performance Measurement for Inventory Routing," Transportation Science, INFORMS, vol. 41(1), pages 44-54, February.
    8. 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.
    9. 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.
    10. Jeffrey W. Ohlmann & Michael J. Fry & Barrett W. Thomas, 2008. "Route Design for Lean Production Systems," Transportation Science, INFORMS, vol. 42(3), pages 352-370, August.
    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.
    12. Alvarez, Aldair & Cordeau, Jean-François & Jans, Raf & Munari, Pedro & Morabito, Reinaldo, 2021. "Inventory routing under stochastic supply and demand," Omega, Elsevier, vol. 102(C).
    13. Oğuz Solyalı & Jean-François Cordeau & Gilbert Laporte, 2012. "Robust Inventory Routing Under Demand Uncertainty," Transportation Science, INFORMS, vol. 46(3), pages 327-340, August.
    14. 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.
    15. Hadi Jahangir & Mohammad Mohammadi & Seyed Hamid Reza Pasandideh & Neda Zendehdel Nobari, 2019. "Comparing performance of genetic and discrete invasive weed optimization algorithms for solving the inventory routing problem with an incremental delivery," Journal of Intelligent Manufacturing, Springer, vol. 30(6), pages 2327-2353, August.
    16. Bertazzi, Luca & Chua, Geoffrey A. & Laganà, Demetrio & Paradiso, Rosario, 2022. "Analysis of effective sets of routes for the split-delivery periodic inventory routing problem," European Journal of Operational Research, Elsevier, vol. 298(2), pages 463-477.
    17. 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).
    18. Ampol Karoonsoontawong & Onwasa Kobkiattawin & Chi Xie, 2019. "Efficient Insertion Heuristic Algorithms for Multi-Trip Inventory Routing Problem with Time Windows, Shift Time Limits and Variable Delivery Time," Networks and Spatial Economics, Springer, vol. 19(2), pages 331-379, June.
    19. Ahmed Kheiri, 2020. "Heuristic Sequence Selection for Inventory Routing Problem," Transportation Science, INFORMS, vol. 54(2), pages 302-312, March.
    20. 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.

    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:52:y:2018:i:3:p:526-546. 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.