Delivery Cost Approximations for Inventory Routing Problems in a Rolling Horizon Framework

Patrick Jaillet (), Jonathan F. Bard (), Liu Huang () and Moshe Dror ()
Additional contact information
Patrick Jaillet: Department of Civil and Environmental Engineering, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139
Jonathan F. Bard: Graduate Program in Operations Research, Mechanical Engineering Department, The University of Texas at Austin, Austin, Texas 78712
Liu Huang: DSC Communications, Austin, Texas 78758-4017
Moshe Dror: College of Business and Public Administration, University of Arizona, Tucson, Arizona 85721

Transportation Science, 2002, vol. 36, issue 3, 292-300

Abstract: The inventory routing problem considered in this paper is concerned with the repeated distribution of a commodity, such as heating oil, over a long period of time to a large number of customers. The problem involves a central depot as well as various satellite facilities which the drivers can visit during their shift to refill their vehicles. The customers maintain a local inventory of the commodity. Their consumption varies daily and cannot be predicted deterministically. In case of a stockout, a direct delivery is made and a penalty cost is incurred. In this paper, we present incremental cost approximations to be used in a rolling horizon framework for the problem of minimizing the total expected annual delivery costs.

Date: 2002
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