CASH FLOW OPTIMIZATION IN DELIVERY SCHEDULING
Abstract The paper examines the inventory routing problem from the perspective of the present value of the cash flow associated with the distribution of a commodity such as propane. We analyze this problem for both deterministic and stochastic customer demands and validate our results on data from a real life distribution operation of propane. The analysis based on the present value of the cash flow indicates that optimization of propane deliveries based on efficiency/cost criteria alone will generate inferior solutions and it would be more advantageous for the company to set deliveries for a large percentage of the customers based on the present value of cash flow. In addition, in the case of stochastic demands, deliveries based on the cash flow consideration will tend to reduce the number of stockouts (i.e. improve both profit and service).
Inventory routing problems: a logistical overview
This paper presents an overview of Supply Chain Management while focussing on the area of Inventory Routing. We aim to provide the state-of-the-art in this area while highlighting the usefulness of the models in practice as well as their limitations. We have classified the papers based on the planning horizon employed in the models namely single period, multiperiod and infinite horizon models that are then complemented by those with stochastic demand patterns. Future research avenues that we believe to be of interest to the OR/MS community are also presented.
A Combined Vehicle Routing and Inventory Allocation Problem
We address the combined problem of allocating a scarce resource among several locations, and planning deliveries using a fleet of vehicles. Demands are random, and holding and shortage costs must be considered in the decision along with transportation costs. We show how to extend some of the available methods for the deterministic vehicle routing problem to this case. Computational results using one such adaptation show that the algorithm is fast enough for practical work, and that substantial cost savings can be achieved with this approach.