Flexibility and Complexity in Periodic Distribution Problems

In this paper, we explore trade-offs between operational flexibility and operational complexity in periodic distribution problems. We consider the gains from operational flexibility in terms of vehicle routing costs and customer service benefits, as well as the costs of operational complexity in terms of modeling, solution methods, and implementation challenges for drivers and customers. The period vehicle routing problem (PVRP) is a variation of the classic vehicle routing problem in which delivery routes are constructed for a period of time; the PVRP with service choice (PVRP-SC) extends the PVRP to allow service (visit) frequency to become a decision of the model. For the periodic distribution problems represented by PVRP and PVRP-SC, we introduce operational flexibility levers and a set of quantitative measures to evaluate the trade-offs between flexibility and complexity. We develop a Tabu Search heuristic to incorporate a range of operational flexibility options. We analyze the potential value and the increased operational complexity of the flexibility levers. © 2006 Wiley Periodicals, Inc. Naval Research Logistics 54: 136–150, 2007