Heuristics for Multi-Depot Inventory Routing Problem

Abstract

The expansion of the online retailing platform leads to the growth of logistic business. The integration between the main two activities in logistic decision which are inventory control and transportation management. The idea here is to improve overall efficiency in term of total cost of the logistic system. This research studies a multi-retailer multi-depot distribution system with multiple items. Decisions in this system include replenishment quantities of items at each retailer and its corresponding delivery route. The main objective is to provide the minimum total inventory and routing cost during considered time horizon. Three heuristic algorithms, SIOH AIRRH and AIRVH, are proposed to solve this problem. The performances of the heuristics are tested by comparing to solution obtained by IBM ILOG CPLEX 12.6 for small-sized problem and Lot-for-Lot policy for medium and large-sized problem. The computational results show that the proposed heuristics can achieve the optimal solution in small-sized problem. Moreover the heuristic AIRVH show improvement from Lot-for-Lot policy between 15-25% in average for the medium and large-sized problem.