The Inventory Routing Problem with Demand Moves

In the Inventory Routing Problem, customer demand is met by inventory replenishments from vehicles over a given planning horizon. The objective is to minimize total routing and inventory holding cost. If the customers are located relatively close to each other, one may have the opportunity to satisfy a part of the demand of a customer by inventory stored at another nearby customer. This if for example the case for ATMs in large cities where a consumer that wants to withdraw money could be redirected to another ATM. In the optimization of the customer replenishments, this option can be included to lower total inventory routing costs. To the best of our knowledge, the possibility of redirecting consumers is new to the operations research literature and has not been implemented by industry practice. We formulate the Inventory Routing Problem with Demand Moves in which demand of a customer can (partially) be satisfied by the inventory at a nearby customer. We propose a Branch-and-Price-and-Cut solution approach which is evaluated on problem instances derived from the literature.

In this talk I will first explain the formulation and solution method for the IRP from the literature which we extend for the IRPDM. Thereafter, I will explain how we extend this formulation to include demand moves and show some preliminary results.

Registration to Remy Spliet, spliet@ese.eur.nl is required for availability of lunch.