An integrated local search method for inventory and routing decisions

The present article studies an inventory routing model which integrates two important components of the supply chain: transportation logistics and inventory control. The distribution system examined consists of customers that face product demand at a deterministic and constant rate. Customer demand is satisfied by a fixed vehicle fleet located at the central depot. The aim of the problem is to determine the timing and size of the replenishment services together with the vehicle routes, so that the total transportation and inventory holding cost of the system is minimized. In methodological terms, we propose a solution approach applying two innovative local search operators for jointly dealing with the inventory and routing aspects of the examined problem, and Tabu Search for further reducing the transportation costs. The proposed algorithmic framework was tested on a set of new benchmark instances of various scales. It produced satisfactory results both in terms of effectiveness and robustness.