Inventory routing

Inventory Management (IM) controls the flow of raw materials and finished products among different members of a Supply Chain (SC). The chief aim of IM is to track the detailed report of new or returned products in order to reduce the substantial costs of stock-holding and lost-sales. In a typical SC, consisting of suppliers, manufacturers, distributors, and wholesalers, the flow of raw materials or finished goods move downwards. This is because suppliers provide raw materials to manufacturers, manufacturers provide finished goods to distributors, and distributors disperse finished goods among wholesalers. The upper members, however, determine their demand based on the demand of their lower members. Accordingly, the flow of demand information moves upward. In real-world settings, the flow of demand information is complex to be interpreted. First, making a trade-off between stock-out and inventory holding costs could be difficult, especially when the demand ofr customers is unknown. Second, the bullwhip effect is another factor that complicates this flow. Using an efficient ordering policy would be beneficial under this condition.

Distribution, warehousing, and logistics have significant adverse impacts on surrounding land uses. Thus, logistics management is another key component of SCs. It includes various sub-problems to plan, control, and implement the effective movement and storage of raw materials and finished goods from suppliers to customers. Logistics costs are large and contribute to a significant portion of costs in a SC. For instance, in the United States, annual expenditures on non-military logistics are estimated at over 11% of its GDP. Likewise, the Department of Trade and Industry in the United Kingdom showed that logistics costs comprise 40% of the GDP in this country. An important part of business competitiveness is in the correct design and implementation of transport strategies.

This project addresses an integrated inventory management and vehichle routing problem, for which we developed an accelerated Benders decomposition algorithm.