An Integrated Inventory-Routing System for Multi-item Joint Replenishment with Limited Vehicle Capacity

Authors:
Sombat Sindhuchao;H. Edwin. Romeijn;Elif Akçali;Rein Boondiskulchok
Affiliations:
Department of Industrial Engineering, Chulalongkorn University, Bangkok, Thailand 10330;Department of Industrial and Systems Engineering, University of Florida, Gainesville, USA 32611-6595;Department of Industrial and Systems Engineering, University of Florida, Gainesville, USA 32611-6595;Department of Industrial Engineering, Chulalongkorn University, Bangkok, Thailand 10330
Venue:
Journal of Global Optimization
Year:
2005

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Abstract

In this paper, we develop a mathematical programming approach for coordinating inventory and transportation decisions in an inbound commodity collection system. In particular, we consider a system that consists of a set of geographically dispersed suppliers that manufacture one or more non-identical items, and a central warehouse that stocks these items. The warehouse faces a constant and deterministic demand for the items from outside retailers. The items are collected by a fleet of vehicles that are dispatched from the central warehouse. The vehicles are capacitated, and must also satisfy a frequency constraint. Adopting a policy in which each vehicle always collects the same set of items, we formulate the inventory-routing problem of minimizing the long-run average inventory and transportation costs as a set partitioning problem. We employ a column generation approach to determine a lower bound on the total costs, and develop a branch-and-price algorithm that finds the optimal assignment of items to vehicles. We also propose greedy constructive heuristics, and develop a very large-scale neighborhood (VLSN) search algorithm to find near-optimal solutions for the problem. Computational tests are performed on a set of randomly generated problem instances.