Research On The Integrated Optimization Of Inventory-transportation System & Its Application

The development of information technology, esp. Internet and Electronic Business, changes the business and competition code completely. The corporations within the supply chain have transformed to be cooperators otherwise competitors. Efficient management of the supply chain requires an integrated approach towards various logistical functions. In particular, the fundamental areas of inventory control and transportation planning need to be closely coordinated.The problem of integrated optimization of inventory-transportation system addresses the point of systemization and integration. It regards inventory and transportation as whole and balances both the transportation and inventory to satisfy demand by the minimal total cost.This paper studies the integrated inventory-transportation problem systematically, with simultaneous decisions made on inventory and transportation policies. We analyze the multi-item joint replenishment problem in distribution and production, and propose heuristic decomposition methods to solve the problem, minimizing the long-run total costs respectively. To develop a flexible system properly balancing short-term and long-term goals and considering all of the important factors, i.e., geography, inventory, capacity, and usage rate, the decomposition algorithm works by using separate calculations for inventory and transportation decisions, and then coordinating them appropriately.