An Efficient Heuristic Algorithm for a Two-Echelon Joint Inventory and Routing Problem

With an increasing emphasis on coordination in the supply chain, the inventory and distribution decisions, which in most part had been dealt with independently of each other, need to be considered jointly. This research considers a two-echelon distribution system consisting of one warehouse and N re...

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Bibliographic Details
Published in:Transportation science 2007-02, Vol.41 (1), p.55-73
Main Authors: Jung, Jaeheon, Mathur, Kamlesh
Format: Article
Language:English
Subjects:
Algorithms
Analysis
Applied sciences
Cost efficiency
Distribution planning
Exact sciences and technology
Ground, air and sea transportation, marine construction
Heuristic
Heuristics
Inventories
Inventory
Inventory management
inventory routing
Logistics
Management
Mathematical intervals
multiretailer inventory problem
Operations research
Retail stores
Retail trade
Routing
Studies
Supply chain management
Supply chains
Transport economics
Transportation
Transportation planning
Transportation planning, management and economics
Vehicle capacity
vehicle routing
Vehicles
Warehouses
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Summary:With an increasing emphasis on coordination in the supply chain, the inventory and distribution decisions, which in most part had been dealt with independently of each other, need to be considered jointly. This research considers a two-echelon distribution system consisting of one warehouse and N retailers that face external demand at a constant rate. Inventories are kept at retailers as well as at the warehouse. The products are delivered to the retailers by a fleet of vehicles with limited capacity. We develop an efficient heuristic procedure that finds a reorder interval for the warehouse, the replenishment quantities (and associated reorder interval) for each retailer, and the delivery routes so as to minimize the long-run average inventory and transportation costs.
ISSN:0041-1655
1526-5447
DOI:10.1287/trsc.1060.0160