Deliveries in an inventory/routing problem using stochastic dynamic programming

Deliveries in an inventory/routing problem using stochastic dynamic programming

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Article ID: iaor2003439
Country: United States
Volume: 35
Issue: 2
Start Page Number: 192
End Page Number: 213
Publication Date: May 2001
Journal: Transportation Science
Authors: ,
Keywords: programming: dynamic, vehicle routing & scheduling, inventory
Abstract:

An industrial gases tanker vehicle visits n customers on a tour, with a possible (n + 1)st customer added at the end. The amount of needed product at each customer is a known random process, typically a Wiener process. The objective is to adjust dynamically the amount of product provided on scene to each customer so as to minimize total expected costs, comprising costs of earliness, lateness, product shortfall, and returning to the depot nonempty. Earliness costs are computed by invocation of an annualized incremental cost argument. Amounts of product delivered to each customer are not known until the driver is on scene at the customer location, at which point the customer is either restocked to capacity or left with some residual empty capacity, the policy determined by stochastic dynamic programming. The methodology has applications beyond industrial gases.

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