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Using truck-inventory-cost to obtain solutions to multi-period logistics models

Author

Listed:
  • Iqbal Agha

    (Department of Finance & Operations Management, Isenberg School of Management, University of Massachusetts at Amherst)

  • Debra J. O'Connor

    (Department of Economics, College of the Holy Cross)

Abstract

The antithetic opposition between the cost of inventory and the fixed cost of transportation, which leads to multiple alternate near-optima, can be a primary contributor to the computational intractability of the mixed integer program for a two-echelon multi-period distribution system. To alleviate the computational intractability, we develop a heuristic procedure that determines the deployments of trucks to, and the consequent levels of inventory at, the second echelon thereby reducing the number of variables in the model. The reduced model is shown to identify near optimal solutions for the entire distribution system in negligible computation time.

Suggested Citation

  • Iqbal Agha & Debra J. O'Connor, 2013. "Using truck-inventory-cost to obtain solutions to multi-period logistics models," Working Papers 1309, College of the Holy Cross, Department of Economics.
    • Handle: RePEc:hcx:wpaper:1309
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