An integrated inventory control and vehicle routing problem

Thesis Type: Postgraduate

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

Approval Date: 2005


Supervisor: HALDUN SÜRAL


In this study, we consider a logistics system, in which a single supplier delivers a product to multiple retailers over a finite time horizon. Supplier decides on the amount to order in each period and services retailers facing deterministic dynamic demand via a fleet of vehicles having limited capacity. Each retailer has specific minimum and maximum levels of inventory in an order-up-to level inventory policy setting. The problem is to simultaneously determine the quantity of product to order to the supplier, retailers to be visited, the quantity of product to be delivered to retailers and routes of vehicles in each period so as to minimize system-wide costs. We present a mathematical formulation for the problem, for which we develop several Lagrangian relaxation based solution procedures providing both upper and lower bounds to the problem. We implement these solution procedures on test instances and present the results. Computational study shows that our solution procedures generate good feasible solutions in reasonable time.