M.Sc Student | Davy Hallufgil |
---|---|

Subject | Deterministic Inventory Routing with Lateral Transshipments |

Department | Department of Industrial Engineering and Management |

Supervisor | Mr. Masin Michael |

In
this research, we consider a two-level supply chain, where the first and second
levels consist of an outside supplier and a set of retailers, respectively.
Each retailer faces dynamic deterministic demand for multiple types of products
over a finite planning horizon. A homogenous fleet of large vehicles located at
the supplier satisfies the periodical demands of each retailer, whereas,
smaller vehicles located at each retailer are responsible for transshipment
within a period. The cost structure of this system consists of fixed vehicle
costs, variable vehicle-dependent transportation cost, fixed cost for replenishment
and transshipment, unit ordering cost, inventory holding and shortage costs. We
call this problem *IRP-LIT*. In order to develop a strong mixed integer
linear programming formulation of the problem, we follow an evolutionary
process. We start with simpler problems, Basic Dynamic Deterministic Inventory
Routing Problem (*Problem BIRP*) and Multi-item Dynamic Deterministic
Inventory Routing Problem with Backlogging (*Problem EIRP*). Their valid
inequalities are incorporated into *Problem IRP-LIT* with slight
modification. For the first two problems, we have applied only standard branch
and bound method, whereas for *Problem IRP-LIT*, we have applied
additional two solution techniques, namely, Lagrangian relaxation method, and
Benders' decomposition method. A comprehensive numerical study has been
performed to evaluate the effect of strengthening and the performance of the
solution techniques. Our results indicate that (1) valid inequalities improve
LP relaxation lower bound significantly for each problem type, (2) Lagrangian
relaxation method outperforms other techniques as problem size increases and
(3) transshipment decreases total cost in most of the cases.