The metered inventory routing problem, an integrative heuristic algorithm

The Metered Inventory Routing Problem involves a central warehouse, a fleet of trucks with a finite capacity, and a set of customers, for each of whom there is an estimated consumption rate, and a known storage capacity. The objective is to the determine when to service each customer, as well as the route to be performed by each truck, in order to minimize the total discounted costs. The problem is solved on a rolling horizon basis, taking into consideration holding, transportation, fixed ordering, and stockout costs. The algorithm we develop uses the concept of ‘temporal distances’; in short, the temporal distance between two customers is the cost of moving these customers to a common period. A simulation study is performed to demonstrate the effectiveness of our procedure.