A Relaxation Based Solution Approach for the Inventory Control and Vehicle Routing Problem in Vendor Managed Systems

• Published in: Modeling, Computation And Optimization pp. 171 - 189
• Main Authors: Solyalı, Oğuz, Süral, Haldun
• Format: Book Chapter
• Language: English
• Published: WORLD SCIENTIFIC 01.04.2009
• Subjects: order-up-to level inventory policy; Lagrangian relaxation; Inventory routing problem
• ISBN: 9789814467896; 9814273511; 9789814273503; 9814467898; 9789814273510; 9814273503
• DOI: 10.1142/9789814273510_0011

We consider a one supplier - multiple retailers system over a finite planning horizon. Retailers have external demands for a single product and their inventories are controlled by the supplier based on order-up-to level inventory policy. The problem is to determine the time and the quantity of product to order for the supplier, the retailers to be visited in any period, the quantity of product to be delivered in these visits and the vehicle routes for deliveries so as to minimize system-wide inventory and routing costs. We present a Lagrangian relaxation based solution procedure and implement the procedure on test instances. Computational study shows that fairly good solutions are found in reasonable time.