Combining Two Heuristics to solve a Supply Chain Optimization Problem

• Main Authors: Lau, Hoong Chuin, SONG, Yuyue
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2002
• Subjects: Meta-Heuristics; Planning; Scheduling; Search; Computer Sciences; Operations and Supply Chain Management
• Online Access: https://ink.library.smu.edu.sg/sis_research/1120; https://ink.library.smu.edu.sg/context/sis_research/article/2119/viewcontent/LauCHECAI2002p0581.pdf
• Institution: Singapore Management University

In this paper, we consider a real-life supply chain optimization problem concerned with supplying a product from multiple warehouses to multiple geographically dispersed retailers. Each retailer faces a deterministic and period-dependent demand over some finite planning horizon. The demand of each retailer is satisfied by the supply from some predetermined warehouse through a fleet of vehicles which are only available within certain time windows at each period. Our goal is to identify a combined inventory and routing schedule such that the system-wide total cost over the planning horizon is minimised. This problem in essence is an amalgamation of two classical NP-hard optimizatin problems: the Dynamic Lotsizing problem and the Vehicle Routing problem. In this paper, we propose an efficient rolling horizon heuristic that combines two heuristics to solve this problem. Numerical experiment results show that our approach can achieve, on average, within 10% of the lower-bound proposed by Chan, Federgruen and Simchi-Levi (1998) for some specific instances generated from Solomon benchmarks.