A Simulation Framework for Real-Time Management and Control of Inventory Routing Decisions

Shrikant Jarugumilli
Sreeram Ramakrishnan, Missouri University of Science and Technology
Scott Erwin Grasman, Missouri University of Science and Technology

This document has been relocated to http://scholarsmine.mst.edu/engman_syseng_facwork/240

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We consider a logistics network where a single warehouse distributes a single item to multiple retailers. Retailers in the network participate in a Vendor Managed Inventory (VMI) program with the warehouse, where the warehouse is responsible for tracking and replenishing the inventory at various retailer locations. The information update occurs every time a vehicle reaches a location and the decision on the delivery quantity and the next location to visit is made. For a small increase of locations in the network, the state space for the solution increases exponentially, making this problem NP-hard. Thus, we propose a solution methodology where in the size of the state space is reduced at each stage. In this work, we use simulation to develop the framework for the real-time control and management of inventory and routing decisions, given this scenario.