Enhancement of Inventory Management Approaches in Vehicle Routing-Cross Docking Problems

Abstract

A cross dock is the consolidation point in a distribution network, where multiple smaller shipments can be merged to full truck loads in order to realize economies in transportation. The focus of this study is to evaluate the possibility of considering inventory management structures in order to enhance the quality of solutions achieved by the classical VRP-Cross Dock (VRPCD) modeling. A mixed-integer programming is taken into account for locating cross docks and allocating Pickup and Delivery Nodes to them by considering each nodes time window in order to minimize the total transportation costs and inventory holding costs inside each cross dock which is the objective function of the modeling. Direct Shipment is used to attach Delivery and Pick-up nodes to cross dock facilities. Determining the necessity and amount of goods trans-shipment among cross docks is a key point in this modeling which causes a Semi-VMI behavior by considering cross dock facilities as the coordinator base of the distribution network. The enhancement of the solutions by adding the ability of transshipment between cross docks is proved. Locating cross dock facilities (Strategic decision) while considering other technical issues (Operational decisions) is one of the major contributions of this study.

Keywords: Cross Docking, Inventory Management, Transportation, Mixed-Integer Programming, Facility Location Allocation

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