Solving a vendor-managed inventory routing problem arising in the distribution of bottled water in Morocco

Jamal Lmariouh, Leandro C. Coelho, Nizar Elhachemi, Gilbert Laporte, Anouar Jamali and Driss Bouami

European Journal of Industrial Engineering, 2017, vol. 11, issue 2, 168-184

Abstract: In this paper we solve a real-life distribution problem faced by a Moroccan bottled water company dealing with a combination of inventory and distribution decisions. To manage its distribution process, the company uses a vendor-managed inventory system, which means that the supplier controls the inventory at the customers. This problem is known as the inventory-routing problem (IRP) in which both transportation and inventory costs are simultaneously minimised. Our real-life problem contains several types of bottled water that must be shipped from a supplier to a set of regional depots and wholesalers. Inventory costs are paid at both the plant and at the customers, and shipments are performed by a fleet of homogeneous vehicles. We propose an ad-hoc modification of IRP models and branch-and-cut algorithms. Computational tests were carried out on fifteen real-life-based instances. The results show that significant savings of almost 10% can be obtained. [Received 20 March 2016; Revised 21 August 2016; Accepted 10 September 2016]

Keywords: inventory routing problem; IRP; branch-and-cut; expert systems; vendor-managed inventory; VMI; bottled water distribution; multi-vehicle; multi-product; Morocco; inventory management. (search for similar items in EconPapers)
Date: 2017
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