A practical solution approach for the cyclic inventory routing problem

Birger Raa and El-Houssaine Aghezzaf

European Journal of Operational Research, 2009, vol. 192, issue 2, 429-441

Abstract: 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.

Keywords: Cyclic; inventory; routing; Supply; chain; optimization (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (37)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:192:y:2009:i:2:p:429-441

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