Using truck-inventory-cost to obtain solutions to multi-period logistics models

Iqbal Agha () and Debra O'Connor ()
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Iqbal Agha: Department of Finance & Operations Management, Isenberg School of Management, University of Massachusetts at Amherst
Debra O'Connor: Department of Economics, College of the Holy Cross

No 1309, Working Papers from College of the Holy Cross, Department of Economics

Abstract: The antithetic opposition between the cost of inventory and the fixed cost of transportation, which leads to multiple alternate near-optima, can be a primary contributor to the computational intractability of the mixed integer program for a two-echelon multi-period distribution system. To alleviate the computational intractability, we develop a heuristic procedure that determines the deployments of trucks to, and the consequent levels of inventory at, the second echelon thereby reducing the number of variables in the model. The reduced model is shown to identify near optimal solutions for the entire distribution system in negligible computation time.

Keywords: Distribution; Integer programming; Logistics (search for similar items in EconPapers)
Pages: 7 pages
Date: 2013-12
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Published in International Journal of Production Economics, Volume 143, Number 1, May 2013, Pages 144-150.

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Persistent link: https://EconPapers.repec.org/RePEc:hcx:wpaper:1309

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