Integrating the Inventory Management and Vehicle Routing Problems for Congested Urban Logistics Network

Consider a congested urban logistics network with one depot and many geographically dispersed retailers facing demands at constant and deterministic rate over a period of planning horizon, but the lead time is variable due to traffic congestion. All stock enters the logistics network through the depot and from where it is distributed to the retailers by a fleet of vehicles. In this paper, we propose a new class of strategies for giving the optimal inventory replenishments for each retailer while the efficient delivery design is taken into account such that the minimization of total inventory cost and transportation cost is achieved. A mathematical program is formulated for this combined problem and a new class of iterative solution strategies is developed. Numerical computations are conducted and the proposed strategies obtain better results in comparison with other alternative with reasonable computational efforts.