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Delivery Cost Approximations for Inventory Routing Problems in a Rolling Horizon Framework

Author

Listed:
  • Patrick Jaillet

    (Department of Civil and Environmental Engineering, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139)

  • Jonathan F. Bard

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

  • Liu Huang

    (DSC Communications, Austin, Texas 78758-4017)

  • Moshe Dror

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

Abstract

The inventory routing problem considered in this paper is concerned with the repeated distribution of a commodity, such as heating oil, over a long period of time to a large number of customers. The problem involves a central depot as well as various satellite facilities which the drivers can visit during their shift to refill their vehicles. The customers maintain a local inventory of the commodity. Their consumption varies daily and cannot be predicted deterministically. In case of a stockout, a direct delivery is made and a penalty cost is incurred. In this paper, we present incremental cost approximations to be used in a rolling horizon framework for the problem of minimizing the total expected annual delivery costs.

Suggested Citation

  • Patrick Jaillet & Jonathan F. Bard & Liu Huang & Moshe Dror, 2002. "Delivery Cost Approximations for Inventory Routing Problems in a Rolling Horizon Framework," Transportation Science, INFORMS, vol. 36(3), pages 292-300, August.
    • Handle: RePEc:inm:ortrsc:v:36:y:2002:i:3:p:292-300
    DOI: 10.1287/trsc.36.3.292.7829
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    References listed on IDEAS

    as
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