One-warehouse multi-retailer problem under inventory control and transportation policies

Thesis Type: Doctorate

Institution Of The Thesis: Orta Doğu Teknik Üniversitesi, Faculty of Engineering, Department of Industrial Engineering, Turkey

Approval Date: 2008


Supervisor: HALDUN SÜRAL


We consider a one-warehouse multi-retailer system where the warehouse orders or receives from its supplier and replenishes multiple retailers with direct shipping or multi-stop routing over a finite time horizon. The warehouse has the knowledge of external (deterministic) demands at the retailers and manages their inventories while ensuring no stock-out. We consider two problems with direct shipping policy and two problems with routing policy. For the direct shipping policy, the problem is to determine the optimal replenishments for the warehouse and retailers such that the system-wide costs are minimized. In one problem, the warehouse decides about how much and when to ship to the retailers while in the other problem, inventory level of the retailer has to be raised up to a predetermined level whenever replenished. We propose strong mixed integer programming formulations for these problems. Computational experiments show that our formulations are better than their competitors and are very successful in solving the problems to optimality. For the routing policy, the problem is to decide on when and in what sequence to visit the retailers and how much to ship to a retailer so as to minimize system-wide costs. In one problem, the warehouse receives given amounts from its supplier while in the other the warehouse decides on its own replenishments. We propose branch-and-cut algorithms and heuristics based on strong formulations for both problems. Computational results reveal that our procedures perform better than their competitors in the literature for both problems.