Inventory routing

The inventory routing problem (IRP) arises where a vendor managed resupply policy is being used. Vendor managed resupply refers to a relationship where the vendor decides when to visit each customer and how much to deliver. In exchange for this freedom, the vendor agrees to ensure that the customer does not run out of product. Developing a distribution strategy for this policy that minimizes distribution costs is the inventory routing problem and is the problem addressed in this thesis.; The focus of the research is on designing and implementing a solution approach for practical versions of the IRP in terms of the size of the problem instance and complexities beyond the basic problem definition. The solution methodology is in two phases and uses a “rolling horizon” type of approach. The first phase considers a long horizon and uses integer programming techniques to make daily decisions. Phase II focuses in on the first few days of the planning period and creates detailed schedules considering many complexities, using an adaptation of insertion heuristics developed for the vehicle routing problem. We also discuss a post-processing procedure for delivering the optimal total volume to the customers on a route when both customer usage rate and product pump time are considered.; The methodology we developed for the IRP can be extended to develop new algorithms for some variants of the vehicle routing problem especially those with flexible delivery quantities.