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).
Heuristic approach for the integrated inventory-distribution problem
We study the integrated inventory distribution problem. We consider an environment in which the demand of each customer is relatively small compared to the vehicle capacity, and the customers are located closely such that a consolidated shipping strategy is appropriate. The model considers inventory holding, backorder, and transportation costs. We develop a heuristic procedure to obtain an approximate solution for this NP-hard problem and demonstrate its effectiveness through computational experiments.
Stochastic vehicle routing with modified savings algorithm
Abstract A stochastic vehicle routing problem (SVRP) differs from the well known vehicle routing problem (VRP) in that the actual customer demand is not known with certainty when the vehicle routes are designed. One aspect that differentiates between these problems is the notion of route failure. Route failure indicates a situation where a vehicle cannot complete all the deliveries on a designed route because its supply is exhausted at some point along the route, before the route's demand is fully satisfied. In this paper, we illustrate the effects of route failure on the expected cost of a route, as well as the impact the direction of a designed route can have on the expected cost. In addition, we present a straight-forward modification of the Clark and Wright savings algorithm to account more fully for all the costs inherent in many real routing problems, where the customers actual demands are uncertain.