Matching supply and demand in a repositioning problem: A case study in the horticultural industry

Abstract

This study investigates demand/supply management to mitigate imbalances in Reusable Transport Items (RTIs) pools – a problem observed, for example, within the horticultural industry. Traditionally, pool operators use transshipments to reposition RTI inventory between depots, while users are assigned to return or collect RTIs from their closest depots. To reduce the need for transshipments, we propose a novel approach that introduces flexibility via user-depot assignments, directing users to return or collect RTIs from optimal locations by compensating them for increased travel distances. We develop a mixed-integer programming model and a fractional relax-and-fix heuristic to solve problems involving up to 50 pool depots across six planning periods. Empirical analysis, based on data from a pool operator in the horticultural industry, demonstrates that the user-depot assignment flexibility can reduce operational costs incurred by the pool operator by 14.2% due to reduced imbalances between demand and supply at depots, with these savings depending on specific problem parameters.