IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v241y2021ics092552732100236x.html
   My bibliography  Save this article

The value of integration of full container load, less than container load and air freight shipments in vendor–managed inventory systems

Author

Listed:
  • Bertazzi, Luca
  • Moezi, Sarem Deilami
  • Maggioni, Francesca

Abstract

We address a long–haul transportation problem of delivering a set of products from a producer to a customer, where Full Container Load (FCL) shipments on one side and Less than Container Load (LCL) or Air Freight shipments on the other side are integrated. A Vendor-Managed Inventory (VMI) approach is used: a decision-maker has to find a periodic shipping policy that minimizes the sum of transportation cost and inventory cost, both at the producer and at the customer. This problem is defined at the tactical level implying that the initial inventory levels at the producer and at the customer are not data, but decision variables. For this problem we formulate a Mixed Integer Linear Programming model and prove its computational complexity. Furthermore, we introduce the concept of Value of Integration of FCL and LCL/Air Freight shipments and prove performance bounds to show that the integration of FCL and LCL/Air Freight shipments can lead to significant cost savings, both in the worst case and on average. Systematic computational experiments are finally carried out.

Suggested Citation

  • Bertazzi, Luca & Moezi, Sarem Deilami & Maggioni, Francesca, 2021. "The value of integration of full container load, less than container load and air freight shipments in vendor–managed inventory systems," International Journal of Production Economics, Elsevier, vol. 241(C).
    • Handle: RePEc:eee:proeco:v:241:y:2021:i:c:s092552732100236x
    DOI: 10.1016/j.ijpe.2021.108260
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S092552732100236X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2021.108260?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Bhatnagar, Rohit & Mehta, Peeyush & Chong Teo, Chee, 2011. "Coordination of planning and scheduling decisions in global supply chains with dual supply modes," International Journal of Production Economics, Elsevier, vol. 131(2), pages 473-482, June.
    2. Luca Bertazzi, 2008. "Analysis of Direct Shipping Policies in an Inventory-Routing Problem with Discrete Shipping Times," Management Science, INFORMS, vol. 54(4), pages 748-762, April.
    3. Neves-Moreira, F. & Amorim, P. & Guimarães, L. & Almada-Lobo, B., 2016. "A long-haul freight transportation problem: Synchronizing resources to deliver requests passing through multiple transshipment locations," European Journal of Operational Research, Elsevier, vol. 248(2), pages 487-506.
    4. Qiu, Yuzhuo & Qiao, Jun & Pardalos, Panos M., 2019. "Optimal production, replenishment, delivery, routing and inventory management policies for products with perishable inventory," Omega, Elsevier, vol. 82(C), pages 193-204.
    5. Bertazzi, Luca & Grazia Speranza, Maria, 2005. "Worst-case analysis of the full load policy in the single link problem," International Journal of Production Economics, Elsevier, vol. 93(1), pages 217-224, January.
    6. Luca Bertazzi & Maria Grazia Speranza, 1999. "Minimizing logistic costs in multistage supply chains," Naval Research Logistics (NRL), John Wiley & Sons, vol. 46(4), pages 399-417, June.
    7. M. G. Speranza & W. Ukovich, 1996. "An algorithm for optimal shipments with given frequencies," Naval Research Logistics (NRL), John Wiley & Sons, vol. 43(5), pages 655-671, August.
    8. Day, Jamison M. & Daniel Wright, P. & Schoenherr, Tobias & Venkataramanan, Munirpallam & Gaudette, Kevin, 2009. "Improving routing and scheduling decisions at a distributor of industrial gasses," Omega, Elsevier, vol. 37(1), pages 227-237, February.
    9. Bertazzi, Luca & Grazia Speranza, Maria, 1999. "Inventory control on sequences of links with given transportation frequencies," International Journal of Production Economics, Elsevier, vol. 59(1-3), pages 261-270, March.
    10. Luca Bertazzi & Lap Mui Ann Chan & Maria Grazia Speranza, 2007. "Analysis of practical policies for a single link distribution system," Naval Research Logistics (NRL), John Wiley & Sons, vol. 54(5), pages 497-509, August.
    11. Luca Bertazzi & Giuseppe Paletta & M. Grazia Speranza, 2002. "Deterministic Order-Up-To Level Policies in an Inventory Routing Problem," Transportation Science, INFORMS, vol. 36(1), pages 119-132, February.
    12. Luca Bertazzi & Maria Grazia Speranza & Walter Ukovich, 2000. "Exact and Heuristic Solutions for a Shipment Problem with Given Frequencies," Management Science, INFORMS, vol. 46(7), pages 973-988, July.
    13. Luca Bertazzi & Maria Speranza, 2001. "Rounding Procedures for the Discrete Version of the Capacitated Economic Order Quantity Problem," Annals of Operations Research, Springer, vol. 107(1), pages 33-49, October.
    14. Qiu, Yuzhuo & Qiao, Jun & Pardalos, Panos M., 2017. "A branch-and-price algorithm for production routing problems with carbon cap-and-trade," Omega, Elsevier, vol. 68(C), pages 49-61.
    15. Bertazzi, Luca & Maggioni, Francesca, 2018. "A stochastic multi-stage fixed charge transportation problem: Worst-case analysis of the rolling horizon approach," European Journal of Operational Research, Elsevier, vol. 267(2), pages 555-569.
    16. Neves-Moreira, Fábio & Almada-Lobo, Bernardo & Cordeau, Jean-François & Guimarães, Luís & Jans, Raf, 2019. "Solving a large multi-product production-routing problem with delivery time windows," Omega, Elsevier, vol. 86(C), pages 154-172.
    17. Bertazzi, Luca & Speranza, Maria Grazia, 2005. "Improved rounding procedures for the discrete version of the capacitated EOQ problem," European Journal of Operational Research, Elsevier, vol. 166(1), pages 25-34, October.
    18. Lawrence D. Burns & Randolph W. Hall & Dennis E. Blumenfeld & Carlos F. Daganzo, 1985. "Distribution Strategies that Minimize Transportation and Inventory Costs," Operations Research, INFORMS, vol. 33(3), pages 469-490, June.
    19. Archetti, Claudia & Speranza, M. Grazia & Boccia, Maurizio & Sforza, Antonio & Sterle, Claudio, 2020. "A branch-and-cut algorithm for the inventory routing problem with pickups and deliveries," European Journal of Operational Research, Elsevier, vol. 282(3), pages 886-895.
    20. Maria Grazia Speranza & Walter Ukovich, 1994. "Minimizing Transportation and Inventory Costs for Several Products on a Single Link," Operations Research, INFORMS, vol. 42(5), pages 879-894, October.
    21. Sila Çetinkaya & Chung-Yee Lee, 2000. "Stock Replenishment and Shipment Scheduling for Vendor-Managed Inventory Systems," Management Science, INFORMS, vol. 46(2), pages 217-232, February.
    22. Bertazzi, Luca & Bosco, Adamo & Laganà, Demetrio, 2015. "Managing stochastic demand in an Inventory Routing Problem with transportation procurement," Omega, Elsevier, vol. 56(C), pages 112-121.
    23. Bertazzi, Luca & Speranza, Maria Grazia & Ukovich, Walter, 1997. "Minimization of logistic costs with given frequencies," Transportation Research Part B: Methodological, Elsevier, vol. 31(4), pages 327-340, August.
    24. Blumenfeld, Dennis E. & Burns, Lawrence D. & Diltz, J. David & Daganzo, Carlos F., 1985. "Analyzing trade-offs between transportation, inventory and production costs on freight networks," Transportation Research Part B: Methodological, Elsevier, vol. 19(5), pages 361-380, October.
    25. Yu, Yugang & Chen, Haoxun & Chu, Feng, 2008. "A new model and hybrid approach for large scale inventory routing problems," European Journal of Operational Research, Elsevier, vol. 189(3), pages 1022-1040, September.
    26. Bertazzi, Luca & Laganà, Demetrio & Ohlmann, Jeffrey W. & Paradiso, Rosario, 2020. "An exact approach for cyclic inbound inventory routing in a level production system," European Journal of Operational Research, Elsevier, vol. 283(3), pages 915-928.
    27. Luca Bertazzi & Lap Mui Ann Chan, 2014. "Analysis of the Best Double Frequency Policy in the Single Link Problem with Discrete Shipping Times," Journal of Optimization Theory and Applications, Springer, vol. 163(1), pages 286-309, October.
    28. Walter J. Bell & Louis M. Dalberto & Marshall L. Fisher & Arnold J. Greenfield & R. Jaikumar & Pradeep Kedia & Robert G. Mack & Paul J. Prutzman, 1983. "Improving the Distribution of Industrial Gases with an On-Line Computerized Routing and Scheduling Optimizer," Interfaces, INFORMS, vol. 13(6), pages 4-23, December.
    29. Awi Federgruen & Paul Zipkin, 1984. "A Combined Vehicle Routing and Inventory Allocation Problem," Operations Research, INFORMS, vol. 32(5), pages 1019-1037, October.
    30. Dennis E. Blumenfeld & Lawrence D. Burns & Carlos F. Daganzo & Michael C. Frick & Randolph W. Hall, 1987. "Reducing Logistics Costs at General Motors," Interfaces, INFORMS, vol. 17(1), pages 26-47, February.
    31. Luca Bertazzi & Maria Grazia Speranza, 2002. "Continuous and Discrete Shipping Strategies for the Single Link Problem," Transportation Science, INFORMS, vol. 36(3), pages 314-325, August.
    32. L Bertazzi & O Zappa, 2012. "Integrating transportation and production: an international study case," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 63(7), pages 920-930, July.
    33. Claudia Archetti & Luca Bertazzi & Gilbert Laporte & Maria Grazia Speranza, 2007. "A Branch-and-Cut Algorithm for a Vendor-Managed Inventory-Routing Problem," Transportation Science, INFORMS, vol. 41(3), pages 382-391, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Leandro C. Coelho & Jean-François Cordeau & Gilbert Laporte, 2014. "Thirty Years of Inventory Routing," Transportation Science, INFORMS, vol. 48(1), pages 1-19, February.
    2. Luca Bertazzi, 2008. "Analysis of Direct Shipping Policies in an Inventory-Routing Problem with Discrete Shipping Times," Management Science, INFORMS, vol. 54(4), pages 748-762, April.
    3. Lap Mui Ann Chan & M. Grazia Speranza & Luca Bertazzi, 2013. "Asymptotic analysis of periodic policies for the inventory routing problem," Naval Research Logistics (NRL), John Wiley & Sons, vol. 60(7), pages 525-540, October.
    4. Luca Bertazzi & Lap Mui Ann Chan, 2014. "Analysis of the Best Double Frequency Policy in the Single Link Problem with Discrete Shipping Times," Journal of Optimization Theory and Applications, Springer, vol. 163(1), pages 286-309, October.
    5. Song, Ruidian & Zhao, Lei & Van Woensel, Tom & Fransoo, Jan C., 2019. "Coordinated delivery in urban retail," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 126(C), pages 122-148.
    6. Mirzapour Al-e-hashem, Seyed M.J. & Rekik, Yacine & Mohammadi Hoseinhajlou, Ebrahim, 2019. "A hybrid L-shaped method to solve a bi-objective stochastic transshipment-enabled inventory routing problem," International Journal of Production Economics, Elsevier, vol. 209(C), pages 381-398.
    7. Oğuz Solyalı & Haldun Süral, 2011. "A Branch-and-Cut Algorithm Using a Strong Formulation and an A Priori Tour-Based Heuristic for an Inventory-Routing Problem," Transportation Science, INFORMS, vol. 45(3), pages 335-345, August.
    8. Mosca, Alyssa & Vidyarthi, Navneet & Satir, Ahmet, 2019. "Integrated transportation – inventory models: A review," Operations Research Perspectives, Elsevier, vol. 6(C).
    9. Hadi Jahangir & Mohammad Mohammadi & Seyed Hamid Reza Pasandideh & Neda Zendehdel Nobari, 2019. "Comparing performance of genetic and discrete invasive weed optimization algorithms for solving the inventory routing problem with an incremental delivery," Journal of Intelligent Manufacturing, Springer, vol. 30(6), pages 2327-2353, August.
    10. N H Moin & S Salhi, 2007. "Inventory routing problems: a logistical overview," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 58(9), pages 1185-1194, September.
    11. Luca Bertazzi & Lap Mui Ann Chan & Maria Grazia Speranza, 2007. "Analysis of practical policies for a single link distribution system," Naval Research Logistics (NRL), John Wiley & Sons, vol. 54(5), pages 497-509, August.
    12. Divsalar, Ali & Vansteenwegen, Pieter, 2016. "A two-phase algorithm for the cyclic inventory routing problemAuthor-Name: Chitsaz, Masoud," European Journal of Operational Research, Elsevier, vol. 254(2), pages 410-426.
    13. Oded Berman & Qian Wang, 2006. "Inbound Logistic Planning: Minimizing Transportation and Inventory Cost," Transportation Science, INFORMS, vol. 40(3), pages 287-299, August.
    14. Baita, Flavio & Ukovich, Walter & Pesenti, Raffaele & Favaretto, Daniela, 1998. "Dynamic routing-and-inventory problems: a review," Transportation Research Part A: Policy and Practice, Elsevier, vol. 32(8), pages 585-598, November.
    15. Luca Bertazzi & Maria Grazia Speranza, 1999. "Minimizing logistic costs in multistage supply chains," Naval Research Logistics (NRL), John Wiley & Sons, vol. 46(4), pages 399-417, June.
    16. Anton J. Kleywegt & Vijay S. Nori & Martin W. P. Savelsbergh, 2002. "The Stochastic Inventory Routing Problem with Direct Deliveries," Transportation Science, INFORMS, vol. 36(1), pages 94-118, February.
    17. Alvarez, Aldair & Cordeau, Jean-François & Jans, Raf & Munari, Pedro & Morabito, Reinaldo, 2021. "Inventory routing under stochastic supply and demand," Omega, Elsevier, vol. 102(C).
    18. Bertazzi, Luca & Speranza, Maria Grazia, 2005. "Improved rounding procedures for the discrete version of the capacitated EOQ problem," European Journal of Operational Research, Elsevier, vol. 166(1), pages 25-34, October.
    19. Kovalev, Alexandr & Ng, C.T., 2008. "A discrete EOQ problem is solvable in O(logn) time," European Journal of Operational Research, Elsevier, vol. 189(3), pages 914-919, September.
    20. Claudia Archetti & Luca Bertazzi & Alain Hertz & M. Grazia Speranza, 2012. "A Hybrid Heuristic for an Inventory Routing Problem," INFORMS Journal on Computing, INFORMS, vol. 24(1), pages 101-116, February.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:241:y:2021:i:c:s092552732100236x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.