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The Inventory Routing Problem with Demand Moves

Author

Listed:
  • Annelieke C. Baller

    (Vrije Universiteit Amsterdam)

  • Said Dabia

    (Vrije Universiteit Amsterdam)

  • Guy Desaulniers

    (GERAD
    Polytechnique Montréal (Québec))

  • Wout E. H. Dullaert

    (Vrije Universiteit Amsterdam)

Abstract

In the Inventory Routing Problem, customer demand is satisfied from inventory which is replenished with capacitated vehicles. The objective is to minimize total routing and inventory holding cost over a time horizon. If the customers are located relatively close to each other, one has the opportunity to satisfy the demand of a customer by inventory stored at another nearby customer. In the optimization of the customer replenishments, this option can be included to lower total costs. This is for example the case for ATMs in urban areas where an ATM-user that wants to withdraw money could be redirected to another ATM. To the best of our knowledge, the possibility of redirecting end-users is new to the operations research literature and has not been implemented, but is being considered, in the industry. We formulate the Inventory Routing Problem with Demand Moves in which demand of a customer can (partially) be satisfied by the inventory of a nearby customer at a service cost depending on the quantity and the distance. We propose a branch-price-and-cut solution approach which is evaluated on problem instances from the literature. Cost improvements over the classical IRP of up to 10% are observed with average savings around 3%.

Suggested Citation

  • Annelieke C. Baller & Said Dabia & Guy Desaulniers & Wout E. H. Dullaert, 2021. "The Inventory Routing Problem with Demand Moves," SN Operations Research Forum, Springer, vol. 2(1), pages 1-61, March.
    • Handle: RePEc:spr:snopef:v:2:y:2021:i:1:d:10.1007_s43069-020-00042-z
    DOI: 10.1007/s43069-020-00042-z
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    References listed on IDEAS

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    1. 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.
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    3. Pasquale Avella & Maurizio Boccia & Laurence A. Wolsey, 2018. "Single-period cutting planes for inventory routing problems," LIDAM Reprints CORE 3009, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    7. Gemma Berenguer & Pinar Keskinocak & J. George Shanthikumar & Jayashankar M. Swaminathan & Luk Van Wassenhove & H. Neil Geismar & Chelliah Sriskandarajah & Yunxia Zhu, 2017. "A Review of Operational Issues in Managing Physical Currency Supply Chains," Production and Operations Management, Production and Operations Management Society, vol. 26(6), pages 976-996, June.
    8. Roel G. van Anholt & Leandro C. Coelho & Gilbert Laporte & Iris F. A. Vis, 2016. "An Inventory-Routing Problem with Pickups and Deliveries Arising in the Replenishment of Automated Teller Machines," Transportation Science, INFORMS, vol. 50(3), pages 1077-1091, August.
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