From storage to shipment: The effect of ignoring inventory when planning routes

Florian Arnold and Kenneth Sörensen

Working Papers from University of Antwerp, Faculty of Business and Economics

Abstract: Routing problems have been widely studied, yet, the interdependences between routing and inventory levels at the supplier are not well-explored. In reality, the optimal distribution of di?fferent goods from potentially multiple depots to customers depends on the inventory levels in the depots. Customers can only be served if su fficient inventory of the demanded product is available. In this paper, we present a model and a corresponding heuristic to capture inventory constraints in routing problems with multiple depots (MPMDVRPI). As the main contribution, we study the e?ect that di?fferent inventory levels have on the quality of the respective distribution routes. Depending on the number of depots and products, we observe cost increases of the routing between 4% and 30% if inventory levels are sparse. Furthermore, we ?find that a di?fferent allocation of inventory to depots can aff?ect the routing costs by up to 9%.

Keywords: Multi-depot vehicle routing problem; Multi-product; Inventory management; Inventory allocation; Metaheuristics (search for similar items in EconPapers)
Pages: 22 pages
Date: 2017-01
New Economics Papers: this item is included in nep-tre
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Persistent link: https://EconPapers.repec.org/RePEc:ant:wpaper:2017002

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