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A Decomposition Approach to the Inventory Routing Problem with Satellite Facilities

Author

Listed:
  • Jonathan F. Bard

    (Graduate Program in Operations Research, Department of Mechanical Engineering, The University of Texas at Austin, Austin, Texas 78712-1063)

  • Liu Huang

    (DSC Communications, 11009 Metric Boulevard, Building 822, Austin, Texas 78758-4017)

  • Patrick Jaillet

    (Department of Management Science and Information Systems, The University of Texas at Austin, Austin, Texas 78712)

  • Moshe Dror

    (College of Business and Public Administration, University of Arizona, Tucson, Arizona 85721)

Abstract

This paper presents a comprehensive decomposition scheme for solving the inventory routing problem in which a central supplier must restock a subset of customers on an intermittent basis. In this setting, the customer demand is not known with certainty and routing decisions taken over the short run might conflict with the long-run goal of minimizing annual operating costs. A unique aspect of the short-run subproblem is the presence of satellite facilities where vehicles can be reloaded and customer deliveries continued until the closing time is reached. Three heuristics have been developed to solve the vehicle routing problem with satellite facilities (randomized Clarke-Wright, GRASP, modified sweep). After the daily tours are derived, a parametric analysis is conducted to investigate the tradeoff between distance and annual costs. This leads to the development of the efficient frontier from which the decision maker is free to choose the most attractive alternative. The proposed procedures are tested on data sets generated from field experience with a national liquid propane distributor.

Suggested Citation

  • Jonathan F. Bard & Liu Huang & Patrick Jaillet & Moshe Dror, 1998. "A Decomposition Approach to the Inventory Routing Problem with Satellite Facilities," Transportation Science, INFORMS, vol. 32(2), pages 189-203, May.
    • Handle: RePEc:inm:ortrsc:v:32:y:1998:i:2:p:189-203
    DOI: 10.1287/trsc.32.2.189
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    References listed on IDEAS

    as
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    4. T. William Chien & Anantaram Balakrishnan & Richard T. Wong, 1989. "An Integrated Inventory Allocation and Vehicle Routing Problem," Transportation Science, INFORMS, vol. 23(2), pages 67-76, May.
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