A solution approach to the inventory routing problem in a three-level distribution system

We consider the infinite horizon inventory routing problem in a three-level distribution system with a vendor, a warehouse and multiple geographically dispersed retailers. In this problem, each retailer faces a demand at a deterministic, retailer-specific rate for a single product. The demand of each retailer is replenished either from the vendor through the warehouse or directly from the vendor. Inventories are kept at both the retailers and the warehouse. The objective is to determine a combined transportation (routing) and inventory strategy minimizing a long-run average system-wide cost while meeting the demand of each retailer without shortage. We present a decomposition solution approach based on a fixed partition policy where the retailers are partitioned into disjoint and collectively exhaustive sets and each set of retailers is served on a separate route. Given a fixed partition, the original problem is decomposed into three sub-problems. Efficient algorithms are developed for the sub-problems by exploring important properties of their optimal solutions. A genetic algorithm is proposed to find a near-optimal fixed partition for the problem. Computational results show the performance of the solution approach.     

A two-phase algorithm for the partial accessibility constrained vehicle routing problem

In the partial accessibility constrained vehicle routing problem, a route can be covered by two types of vehicles, i.e. truck or truck + trailer. Some customers are accessible by both vehicle types, whereas others solely by trucks. After introducing an integer programming formulation for the problem, we describe a two-phase heuristic method which extends a classical vehicle routing algorithm. Since it is necessary to solve a combinatorial problem that has some similarities with the generalized assignment problem, we propose an enumerative procedure in which bounds are obtained from a Lagrangian relaxation. The routine provides very encouraging results on a set of test problems.     

A Lagrangian relaxation-based heuristic for the vehicle routing with full container load

We address a problem of vehicle routing that arises in picking up and delivering full container load from/to an intermodal terminal. The substantial cost and time savings are expected by efficient linkage between pickup and delivery tasks, if the time of tasks and the suitability of containers for cargo allow. As this problem is NP-hard, we develop a subgradient heuristic based on a Lagrangian relaxation which enables us to identify a near optimal solution. The heuristic consists of two sub-problems: the classical assignment problem and the generalized assignment problem. As generalized assignment problem is also NP-hard, we employ an efficient solution procedure for a bin packing based problem, which replaces the generalized assignment problem. The heuristic procedure is tested on a wide variety of problem examples. The test results demonstrate that the procedure developed here can efficiently solve large instances of the problem.     

A new exact algorithm for the vehicle routing problem based onq-paths andk-shortest paths relaxations

We consider the basic Vehicle Routing Problem (VRP) in which a fleet ofM identical vehicles stationed at a central depot is to be optimally routed to supply customers with known demands subject only to vehicle capacity constraints. In this paper, we present an exact algorithm for solving the VRP that uses lower bounds obtained from a combination of two relaxations of the original problem which are based on the computation ofq-paths andk-shortest paths. A set of reduction tests derived from the computation of these bounds is applied to reduce the size of the problem and to improve the quality of the bounds. The resulting lower bounds are then embedded into a tree-search procedure to solve the problem optimally. Computational results are presented for a number of problems taken from the literature. The results demonstrate the effectiveness of the proposed method in solving problems involving up to about 50 customers and in providing tight lower bounds for problems up to about 150 customers.     

New models and algorithms for the cyclic inventory routing problem

This is a summary of the author’s PhD thesis supervised by El-Houssaine Aghezzaf and defended on 4 December 2006 at the Universiteit Gent. The thesis is written in English and is electronically available from http://ir18.ugent.be/birger.raa/. This work studies the problem of finding optimal three-way cost trade-offs between vehicle fleet costs, distribution costs and holding costs in the cyclic replenishment of a set of customers with constant demand rates from a single depot.      

Performance evaluation of distribution strategies for the inventory routing problem

Direct shipping strategy is an easy-to-implement distribution strategy frequently used in industrial distribution systems. In this paper, an analytic method is developed for performance evaluation of the strategy for the infinite horizon inventory routing problem with delivery frequency constraint. With the method, the effectiveness of direct shipping strategy can be represented as a function of some system parameters. We demonstrate that the effectiveness of direct shipping is at least the square root of the smallest utilization ratio of vehicle capacity. This implies that the effectiveness of the strategy can reach 100% (respectively, 94.86%) whenever the demand rate of each retailer is 100% (respectively, 90%) of the vehicle capacity multiplied by the upper bound of the delivery frequency. This insight can help a firm answer questions such as: under what conditions direct shipping strategy is effective and why, and how effective the strategy is under a specific condition? In case direct shipping strategy is proven ineffective, a more general Fixed Partition Policy (FPP) that combines direct shipping strategy and multiple-stop shipping strategy must be used. An analytic method is also developed for performance evaluation of general FPPs. We demonstrate that the effectiveness of an FPP depends on the total demand rate of the retailers in each partition (each retailer set) and their closeness level. This insight provides a useful guideline to the design of effective FPPs. The analytic methods make the performance improvement of a distribution system possible through adjusting its system parameters.     

A partition approach to the inventory/routing problem

In this study we focus on the integration of inventory control and vehicle routing schedules for a distribution system in which the warehouse is responsible for the replenishment of a single item to the retailers with demands occurring at a specific constant (but retailer-dependent) rate, combining deliveries into efficient routes. This research proposes a fixed partition policy for this type of problem, in which the replenishment interval of each of the retailers’ partition region as well as the warehouse is accorded the power of two (POT) principle. A lower bound of the long-run average cost of any feasible strategy for the considered distribution system is drawn. And a tabu search algorithm is designed to find the retailers’ optimal partition regions under the fixed partition policy proposed. Computational results reveal the effectiveness of the policy as well as of the algorithm.     

An inventory–routing problem with the objective of travel time minimization

In this paper, we consider an inventory–routing problem (IRP) in a large petroleum and petrochemical enterprise group. Compared to many other IRPs, the problem in this paper includes some special aspects due to the operational constraints, such as hours-of-service regulations of the company and the industry. Also, in some cases, it is more important to avoid stock out for any station, rather than purely focusing on transportation cost minimization. The objective is to minimize the maximum of the route travel time, which is not addressed in the literature so far. We present a tabu search algorithm to tackle the problem, which builds in an efficient and effective procedure to improve the search quality in each iteration. Moreover, lower bounds of reasonable sized problems, which are intractable in the formulated mathematical model by existing optimization software, are obtained via Lagrangian relaxation technique. Computational results indicate that the lower bounds are tight and the tabu search is capable of providing near optimal, close-to-lower-bound solutions in a computational time effective manner.     

Fleet routing position-based model for inventory pickup under production shutdown

This paper addresses the problem of collecting inventory of production at various plants having limited storage capacity, violation of which forces plant shutdowns. The production at plants is continuous (with known rates) and a fleet of vehicles need to be scheduled to transport the commodity from plants to a central storage or depot, possibly making multiple pickups at a given plant to avoid shutdown. One operational objective is to achieve the highest possible rate of product retrieval at the depot, relative to the total travel time of the fleet. This problem is a variant (and generalization) of the inventory routing problem. The motivating application for this paper is barge scheduling for oil pickup from off-shore oil-producing platforms with limited holding capacity, where shutdowns are prohibitively expensive. We develop a new model that is fundamentally different from standard node-arc or path formulations in the literature. The proposed model is based on assigning a unique position to each vehicle visit at a node in a chronological sequence of vehicle-nodal visits. This approach leads to substantial flexibility in modeling multiple visits to a node using multiple vehicles, while controlling the number of binary decision variables. Consequently, our position-based model solves larger model instances significantly more efficiently than the node-arc counterpart. Computational experience of the proposed model with the off-shore barge scheduling application is reported.     

An iterated local search algorithm for the single-vehicle cyclic inventory routing problem

The Single-Vehicle Cyclic Inventory Routing Problem (SV-CIRP) belongs to the class of Inventory Routing Problems (IRP) in which the supplier optimises both the distribution costs and the inventory costs at the customers. The goal of the SV-CIRP is to minimise both kinds of costs and to maximise the collected rewards, by selecting a subset of customers from a given set and determining the quantity to be delivered to each customer and the vehicle routes, while avoiding stockouts. A cyclic distribution plan should be developed for a single vehicle.     

A goal programming approach to vehicle routing problems with soft time windows

The classical vehicle routing problem involves designing a set of routes for a fleet of vehicles based at one central depot that is required to serve a number of geographically dispersed customers, while minimizing the total travel distance or the total distribution cost. Each route originates and terminates at the central depot and customers demands are known. In many practical distribution problems, besides a hard time window associated with each customer, defining a time interval in which the customer should be served, managers establish multiple objectives to be considered, like avoiding underutilization of labor and vehicle capacity, while meeting the preferences of customers regarding the time of the day in which they would like to be served (soft time windows). This work investigates the use of goal programming to model these problems. To solve the model, an enumeration-followed-by-optimization approach is proposed which first computes feasible routes and then selects the set of best ones. Computational results show that this approach is adequate for medium-sized delivery problems.     

A cluster-based optimization approach for the multi-depot heterogeneous fleet vehicle routing problem with time windows

This paper presents a novel three-phase heuristic/algorithmic approach for the multi-depot routing problem with time windows and heterogeneous vehicles. It has been derived from embedding a heuristic-based clustering algorithm within a VRPTW optimization framework. To this purpose, a rigorous MILP mathematical model for the VRPTW problem is first introduced. Likewise other optimization approaches, the new formulation can efficiently solve case studies involving at most 25 nodes to optimality. To overcome this limitation, a preprocessing stage clustering nodes together is initially performed to yield a more compact cluster-based MILP problem formulation. In this way, a hierarchical hybrid procedure involving one heuristic and two algorithmic phases was developed. Phase I aims to identifying a set of cost-effective feasible clusters while Phase II assigns clusters to vehicles and sequences them on each tour by using the cluster-based MILP formulation. Ordering nodes within clusters and scheduling vehicle arrival times at customer locations for each tour through solving a small MILP model is finally performed at Phase III. Numerous benchmark problems featuring different sizes, clustered/random customer locations and time window distributions have been solved at acceptable CPU times.     

A practical solution approach for the cyclic inventory routing problem

Vendor managed inventory (VMI) is an example of effective cooperation and partnering practices between up- and downstream stages in a supply chain. In VMI, the supplier takes the responsibility for replenishing his customers’ inventories based on their consumption data, with the aim of optimizing the over all distribution and inventory costs throughout the supply chain. This paper discusses the challenging optimization problem that arises in this context, known as the inventory routing problem (IRP). The objective of this IRP problem is to determine a distribution plan that minimizes average distribution and inventory costs without causing any stock-out at the customers. Deterministic constant customer demand rates are assumed and therefore, a long-term cyclical approach is adopted, integrating fleet sizing, vehicle routing, and inventory management. Further, realistic side-constraints such as limited storage capacities, driving time restrictions and constant replenishment intervals are taken into account. A heuristic solution approach is proposed, analyzed and evaluated against a comparable state-of-the-art heuristic.     

Hybrid heuristics for a short sea inventory routing problem

We consider a short sea fuel oil distribution problem where an oil company is responsible for the routing and scheduling of ships between ports such that the demand for various fuel oil products is satisfied during the planning horizon. The inventory management has to be considered at the demand side only, and the consumption rates are given and assumed to be constant within the planning horizon. The objective is to determine distribution policies that minimize the routing and operating costs, while the inventory levels are maintained within their limits. We propose an arc-load flow formulation for the problem which is tightened with valid inequalities. In order to obtain good feasible solutions for planning horizons of several months, we compare different hybridization strategies. Computational results are reported for real small-size instances.     

A decomposition approach for a very large scale optimal diversity management problem

This paper focuses on the solution of the optimal diversity management problem formulated as a p-Median problem. The problem is solved for very large scale real instances arising in the car industry and defined on a graph with several tens of thousands of nodes and with several millions of arcs. The particularity is that the graph can consist of several non connected components. This property is used to decompose the problem into a series of p-Median subproblems of a smaller dimension. We use a greedy heuristic and a Lagrangian heuristic for each subproblem. The solution of the whole problem is obtained by solving a suitable assignment problem using a Branch-and-Bound algorithm.Received: June 2004 / Revised version: December 2004MSC classification: 49M29, 90C06, 90C27, 90C60All correspondence to: Antonio SforzaIgor Vasilev: Support for this author was provided by NATO grant CBP.NR.RIG.911258.     

A Lagrangian relaxation approach to large-scale flow interception problems

The paper presents a tight Lagrangian bound and an efficient dual heuristic for the flow interception problem. The proposed Lagrangian relaxation decomposes the problem into two subproblems that are easy to solve. Information from one of the subproblems is used within a dual heuristic to construct feasible solutions and is used to generate valid cuts that strengthen the relaxation. Both the heuristic and the relaxation are integrated into a cutting plane method where the Lagrangian bound is calculated using a subgradient algorithm. In the course of the algorithm, a valid cut is added and integrated efficiently in the second subproblem and is updated whenever the heuristic solution improves. The algorithm is tested on randomly generated test problems with up to 500 vertices, 12,483 paths, and 43 facilities. The algorithm finds a proven optimal solution in more than 75% of the cases, while the feasible solution is on average within 0.06% from the upper bound.     

Incorporating inventory and routing costs in strategic location models

We consider a supply chain design problem where the decision maker needs to decide the number and locations of the distribution centers (DCs). Customers face random demand, and each DC maintains a certain amount of safety stock in order to achieve a certain service level for the customers it serves. The objective is to minimize the total cost that includes location costs and inventory costs at the DCs, and distribution costs in the supply chain. We show that this problem can be formulated as a nonlinear integer programming model, for which we propose a Lagrangian relaxation based solution algorithm. By exploring the structure of the problem, we find a low-order polynomial algorithm for the nonlinear integer programming problem that must be solved in solving the Lagrangian relaxation sub-problems. We present computational results for several instances of the problem with sizes ranging from 40 to 320 customers. Our results show the benefits of having an integrated supply chain design framework that includes location, inventory, and routing decisions in the same optimization model.     

A variable neighborhood search heuristic for periodic routing problems

The aim of this paper is to propose a new heuristic for the Periodic Vehicle Routing Problem (PVRP) without time windows. The PVRP extends the classical Vehicle Routing Problem (VRP) to a planning horizon of several days. Each customer requires a certain number of visits within this time horizon while there is some flexibility on the exact days of the visits. Hence, one has to choose the visit days for each customer and to solve a VRP for each day. Our method is based on Variable Neighborhood Search (VNS). Computational results are presented, that show that our approach is competitive and even outperforms existing solution procedures proposed in the literature. Also considered is the special case of a single vehicle, i.e. the Periodic Traveling Salesman Problem (PTSP). It is shown that slight changes of the proposed VNS procedure is also competitive for the PTSP.     

Two-stage vehicle routing problem with arc time windows: A mixed integer programming formulation and a heuristic approach

In this paper, we introduce a new variant of the Vehicle Routing Problem (VRP), namely the Two-Stage Vehicle Routing Problem with Arc Time Windows (TS_VRP_ATWs) which generally emerges from both military and civilian transportation. The TS_VRP_ATW is defined as finding the vehicle routes in such a way that each arc of the routes is available only during a predefined time interval with the objective of overall cost minimization. We propose a Mixed Integer Programming (MIP) formulation and a heuristic approach based on Memetic Algorithm (MA) to solve the TS_VRP_ATW. The qualities of both solution approaches are measured by using the test problems in the literature. Experimental results show that the proposed MIP formulation provides the optimal solutions for the test problems with 25 and 50 nodes, and some test problems with 100 nodes. Results also show that the proposed MA is promising quality solutions in a short computation time.