Abstract In this paper, we explore the value of considering simultaneous pickups and deliveries in multi-product inventory-routing problems both with deterministic and uncertain demand. We propose a multi-commodity, develop an exact branch-and-cut algorithm with patching heuristics to efficiently tackle this problem, and provide insightful analyses based on optimal plans. The simplicity of the proposed approach is an important aspect, as it facilitates its usage in practice, opposed to complicated stochastic or probabilistic methods. The computational experiments suggest that in the deterministic demand setting, pickups are mainly used to balance initial inventories, achieving an average total cost reduction of 1.1%, while transshipping 2.4% of total demand. Under uncertain demand, pickups are used extensively, achieving cost savings of up to 6.5% in specific settings. Overall, our sensitivity analysis shows that high inventory costs and high degrees of demand uncertainty drive the usage of pickups, which, counter-intuitively, are not desirable in every case.

    Highlights We propose a mathematical model considering pickups and deliveries in multi-product inventory-routing problems. We propose an exact branch-and-cut algorithm with a patching heuristic which repairs routing-infeasible solutions and performs local search. Our deterministic model is tested on a stochastic demand setting through a rolling horizon heuristic resembling the daily routine of a planner. In the deterministic demand setting, pickups and deliveries are useful for capacity reasons and to cope with initial inventory imbalances. In rolling horizon planning with stochastic demand, pickups provide further savings in specific settings.


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    Title :

    The multi-product inventory-routing problem with pickups and deliveries: Mitigating fluctuating demand via rolling horizon heuristics




    Publication date :

    2022-06-05




    Type of media :

    Article (Journal)


    Type of material :

    Electronic Resource


    Language :

    English





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