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

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  • 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
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    References listed on IDEAS

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    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. 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.
    3. 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.
    4. 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.
    5. 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.
    6. 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.
    7. 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.

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