IDEAS home Printed from https://ideas.repec.org/a/inm/ortrsc/v41y2007i1p55-73.html
   My bibliography  Save this article

An Efficient Heuristic Algorithm for a Two-Echelon Joint Inventory and Routing Problem

Author

Listed:
  • Jaeheon Jung

    (Posco Research Institute, 137 Samseong-dong, Gangnam-gu, Seoul 135-878, South Korea)

  • Kamlesh Mathur

    (Department of Operations, Weatherhead School of Management, Case Western Reserve University, Cleveland, Ohio 44106)

Abstract

With an increasing emphasis on coordination in the supply chain, the inventory and distribution decisions, which in most part had been dealt with independently of each other, need to be considered jointly. This research considers a two-echelon distribution system consisting of one warehouse and N retailers that face external demand at a constant rate. Inventories are kept at retailers as well as at the warehouse. The products are delivered to the retailers by a fleet of vehicles with limited capacity. We develop an efficient heuristic procedure that finds a reorder interval for the warehouse, the replenishment quantities (and associated reorder interval) for each retailer, and the delivery routes so as to minimize the long-run average inventory and transportation costs.

Suggested Citation

  • Jaeheon Jung & Kamlesh Mathur, 2007. "An Efficient Heuristic Algorithm for a Two-Echelon Joint Inventory and Routing Problem," Transportation Science, INFORMS, vol. 41(1), pages 55-73, February.
    • Handle: RePEc:inm:ortrsc:v:41:y:2007:i:1:p:55-73
    DOI: 10.1287/trsc.1060.0160
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/trsc.1060.0160
    Download Restriction: no
    File URL: https://libkey.io/10.1287/trsc.1060.0160?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
    ---><---

    References listed on IDEAS

    as
    1. Leroy B. Schwarz, 1973. "A Simple Continuous Review Deterministic One-Warehouse N-Retailer Inventory Problem," Management Science, INFORMS, vol. 19(5), pages 555-566, January.
    2. Julien Bramel & David Simchi-Levi, 1995. "A Location Based Heuristic for General Routing Problems," Operations Research, INFORMS, vol. 43(4), pages 649-660, August.
    3. Yale Herer & Robin Roundy, 1997. "Heuristics for a One-Warehouse Multiretailer Distribution Problem with Performance Bounds," Operations Research, INFORMS, vol. 45(1), pages 102-115, February.
    4. S. Viswanathan & Kamlesh Mathur, 1997. "Integrating Routing and Inventory Decisions in One-Warehouse Multiretailer Multiproduct Distribution Systems," Management Science, INFORMS, vol. 43(3), pages 294-312, March.
    5. 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.
    6. Guillermo Gallego & David Simchi-Levi, 1990. "On the Effectiveness of Direct Shipping Strategy for the One-Warehouse Multi-Retailer R-Systems," Management Science, INFORMS, vol. 36(2), pages 240-243, February.
    7. S. Anily & A. Federgruen, 1993. "Two-Echelon Distribution Systems with Vehicle Routing Costs and Central Inventories," Operations Research, INFORMS, vol. 41(1), pages 37-47, February.
    8. S. Anily & A. Federgruen, 1990. "One Warehouse Multiple Retailer Systems with Vehicle Routing Costs," Management Science, INFORMS, vol. 36(1), pages 92-114, January.
    9. William L. Maxwell & John A. Muckstadt, 1985. "Establishing Consistent and Realistic Reorder Intervals in Production-Distribution Systems," Operations Research, INFORMS, vol. 33(6), pages 1316-1341, December.
    10. 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.
    11. S. Anily & A. Federgruen, 1990. "A Class of Euclidean Routing Problems with General Route Cost Functions," Mathematics of Operations Research, INFORMS, vol. 15(2), pages 268-285, May.
    12. Billy E. Gillett & Leland R. Miller, 1974. "A Heuristic Algorithm for the Vehicle-Dispatch Problem," Operations Research, INFORMS, vol. 22(2), pages 340-349, April.
    13. Philip Kaminsky & David Simchi-Levi, 1998. "Probabilistic Analysis and Practical Algorithms for the Flow Shop Weighted Completion Time Problem," Operations Research, INFORMS, vol. 46(6), pages 872-882, December.
    14. Lap Mui Ann Chan & Awi Federgruen & David Simchi-Levi, 1998. "Probabilistic Analyses and Practical Algorithms for Inventory-Routing Models," Operations Research, INFORMS, vol. 46(1), pages 96-106, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ali Ekici & Okan Örsan Özener, 2020. "Inventory routing for the last mile delivery of humanitarian relief supplies," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 42(3), pages 621-660, September.
    2. Fernando Afonso Santos & Geraldo Robson Mateus & Alexandre Salles da Cunha, 2015. "A Branch-and-Cut-and-Price Algorithm for the Two-Echelon Capacitated Vehicle Routing Problem," Transportation Science, INFORMS, vol. 49(2), pages 355-368, May.
    3. Li, Jianxiang & Chu, Feng & Chen, Haoxun, 2011. "A solution approach to the inventory routing problem in a three-level distribution system," European Journal of Operational Research, Elsevier, vol. 210(3), pages 736-744, May.
    4. Ali Ekici & Okan Örsan Özener & Gültekin Kuyzu, 2015. "Cyclic Delivery Schedules for an Inventory Routing Problem," Transportation Science, INFORMS, vol. 49(4), pages 817-829, November.
    5. Emre Çankaya & Ali Ekici & Okan Örsan Özener, 2019. "Humanitarian relief supplies distribution: an application of inventory routing problem," Annals of Operations Research, Springer, vol. 283(1), pages 119-141, December.
    6. Li, Jianxiang & Chen, Haoxun & Chu, Feng, 2010. "Performance evaluation of distribution strategies for the inventory routing problem," European Journal of Operational Research, Elsevier, vol. 202(2), pages 412-419, April.
    7. Mohd Kamarul Irwan Abdul Rahim & El-Houssaine Aghezzaf & Veronique Limère & Birger Raa, 2016. "Analysing the effectiveness of vendor-managed inventory in a single-warehouse, multiple-retailer system," International Journal of Systems Science, Taylor & Francis Journals, vol. 47(8), pages 1953-1965, June.

    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. Anton J. Kleywegt & Vijay S. Nori & Martin W. P. Savelsbergh, 2004. "Dynamic Programming Approximations for a Stochastic Inventory Routing Problem," Transportation Science, INFORMS, vol. 38(1), pages 42-70, 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. Raa, Birger & Aghezzaf, El-Houssaine, 2009. "A practical solution approach for the cyclic inventory routing problem," European Journal of Operational Research, Elsevier, vol. 192(2), pages 429-441, January.
    4. 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.
    5. 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.
    6. Ali Ekici & Okan Örsan Özener & Gültekin Kuyzu, 2015. "Cyclic Delivery Schedules for an Inventory Routing Problem," Transportation Science, INFORMS, vol. 49(4), pages 817-829, November.
    7. Leandro C. Coelho & Jean-François Cordeau & Gilbert Laporte, 2014. "Thirty Years of Inventory Routing," Transportation Science, INFORMS, vol. 48(1), pages 1-19, February.
    8. Paweł Hanczar, 2014. "Solving IRP using location based heuristics," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 24(2), pages 81-96.
    9. 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.
    10. 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.
    11. 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.
    12. Wei Huang & H. Edwin Romeijn & Joseph Geunes, 2005. "The continuous‐time single‐sourcing problem with capacity expansion opportunities," Naval Research Logistics (NRL), John Wiley & Sons, vol. 52(3), pages 193-211, April.
    13. Lap Mui Ann Chan & David Simchi-Levi, 1998. "Probabilistic Analyses and Algorithms for Three-Level Distribution Systems," Management Science, INFORMS, vol. 44(11-Part-1), pages 1562-1576, November.
    14. 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.
    15. Zhao, Qiu-Hong & Chen, Shuang & Zang, Cun-Xun, 2008. "Model and algorithm for inventory/routing decision in a three-echelon logistics system," European Journal of Operational Research, Elsevier, vol. 191(3), pages 623-635, December.
    16. Mohd Kamarul Irwan Abdul Rahim & El-Houssaine Aghezzaf & Veronique Limère & Birger Raa, 2016. "Analysing the effectiveness of vendor-managed inventory in a single-warehouse, multiple-retailer system," International Journal of Systems Science, Taylor & Francis Journals, vol. 47(8), pages 1953-1965, June.
    17. Zhao, Qiu-Hong & Wang, Shou-Yang & Lai, K.K., 2007. "A partition approach to the inventory/routing problem," European Journal of Operational Research, Elsevier, vol. 177(2), pages 786-802, March.
    18. Li, Xiuhui & Wang, Qinan, 2007. "Coordination mechanisms of supply chain systems," European Journal of Operational Research, Elsevier, vol. 179(1), pages 1-16, May.
    19. 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.
    20. Mosca, Alyssa & Vidyarthi, Navneet & Satir, Ahmet, 2019. "Integrated transportation – inventory models: A review," Operations Research Perspectives, Elsevier, vol. 6(C).

    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:inm:ortrsc:v:41:y:2007:i:1:p:55-73. 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: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    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.