| In Operations Research literature, the problem of inventory control and distribution has been in most part dealt with independently. However, with an increasing emphasis on coordination in the supply chain, in many situations, these decisions need to be considered jointly. This research considers a distribution system consisting of warehouse and N retailers that face external demand at a constant rate. Inventories are kept at retailers as well as at the warehouse. The products are delivered to the retailers by a set of vehicles with limited capacity at a regular reorder interval that is an integer multiple of a base order interval (for example, a day, a month or a year). The objective is to find the optimal replenishment quantities for each retailer as well as the vehicle routes to deliver these quantities, so as to minimize the long run average inventory and transportation costs. In this research, we develop an efficient solution procedure to solve this problem. The computational results show that the proposed algorithm results in significant cost saving when compared to other possible alternative methods. |
