Modeling inventory routing problems in supply chains of high consumption products

Modeling inventory routing problems in supply chains of high consumption products

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Article ID: iaor2007182
Country: Netherlands
Volume: 169
Issue: 3
Start Page Number: 1048
End Page Number: 1063
Publication Date: Mar 2006
Journal: European Journal of Operational Research
Authors: , ,
Keywords: inventory, heuristics
Abstract:

Given a distribution center and a set of sales-points with their demand rates, the objective of the inventory routing problem (IRP) is to determine a distribution plan that minimizes fleet operating and average total distribution and inventory holding costs without causing a stock-out at any of the sales-points during a given planning horizon. We propose a new model for the long-term IRP when demand rates are stable and economic order quantity-like policies are used to manage inventories of the sales-points. The proposed model extends the concept of vehicle routes (tours) to vehicle multi-tours. To solve the nonlinear mixed integer formulation of this problem, a column generation based approximation method is suggested. The resulting sub-problems are solved using a savings-based approximation method. The approach is tested on randomly generated problems with different settings of some critical factors to compare our model using multi-tours as basic constructs to the model using simple tours as basic constructs.

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