Clustering Heuristic For Inventory Routing Problem For Small Retail Stores

In today’s Beijing, small retail shops operate around every corner of the city. They aresmall scale stores with private ownerships. They are aimed to provide a convenient placeto shop for the local residents while giving the owners profits on the side. However, due tomany limitations such as the inventory size, the stores need frequent deliveries. To helpsolving the problem of distribution to stores with an inventory limitation, a clusteringheuristic is used. This is a way to group stores together, so they are delivered together. Asimulation is used with similar conditions to the situation in the small retail shops. In theexperiment it has shown that using this method, depending on the specific shop locations,the cost is20-40%smaller than currently used method, which is different depends on thenature of the experiment. It also shows that the result is10%above that of the optimalsolution. It has also been show that increasing vehicle capacity can reduce cost in thisheuristic method, while the effects of the size of the group and period of cycle time arestill unclear. Overall, clustering heuristic provides an alternative to the optimal solution,when the latter is hard to achieve under certain scenarios.