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

Abstract

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 largescale neighborhood (VLSN) search algorithm to find near-optimal solutions for the problem. Computational tests are performed on a set of randomly generated problem instances. Key words: Inventory-routing, Multi-item inventory replenishment, Transportation, Economic order quantity, Column generation, Very large-scale neighborhood searc