Integrated inventory problem and vehicle routing problem in one warehouse and multi-retailer distribution system
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The objective of the one warehouse multi-retailer distribution problem is to find replenishment policies that specify delivery quantities, delivery intervals and vehicle routes that minimize inventory and transportation costs. Since each retailer has a different demand, the warehouse has to supply each retailer with different order quantities and replenishment periods. In addition, the warehouse has to decide which retailers can be served by the same route. Thus, to solve this distribution system, we must include both the inventory problem and the vehicle routing problem. This chapter is organized as follows. The inventory problem, which is the EOQ model, will be described first and the classical VRP model will be discussed next. Finally, we present the single warehouse and many retailers distribution system including some general assumptions.