An integrated inventory–transportation system with modified periodic policy for multiple products

An integrated inventory–transportation system with modified periodic policy for multiple products

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Article ID: iaor20001347
Country: Netherlands
Volume: 115
Issue: 2
Start Page Number: 254
End Page Number: 269
Publication Date: Jun 1999
Journal: European Journal of Operational Research
Authors: , ,
Keywords: programming: transportation
Abstract:

Efficient management of a distribution system requires an integrated approach towards various logistical functions. In particular, the fundamental areas of inventory control and transportation planning need to be closely coordinated. Our model deals with an inbound material-collection problem. An integrated inventory–transportation system is developed with a modified periodic-review inventory policy and a travelling-salesman component. This is a multi-item joint replenishment problem, in a stochastic setting, with simultaneous decisions made on inventory and transportation policies. We propose a heuristic decomposition method to solve the problem, minimizing the long-run total average costs (major- and minor-ordering, holding, backlogging, stopover and travel). The decomposition algorithm works by using separate calculations for inventory and routing decisions, and then coordinating them appropriately. A lower bound is constructed and computational experience is reported.

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