An optimization algorithm for the inventory routing problem with continuous moves

The typical inventory routing problem deals with the repeated distribution of a single product from a single facility with an unlimited supply to a set of customers that can all be reached with out-and-back trips. Unfortunately, this is not always the reality. We focus on the inventory routing problem with continuous moves, which incorporates two important real-life complexities: limited product availabilities at facilities and customers that cannot be served using out-and-back tours. We need to design delivery tours spanning several days, covering huge geographic areas, and involving product pickups at different facilities. We develop an integer programming based optimization algorithm capable of solving small to medium size instances. This optimization algorithm is embedded in local search procedure to improve solutions produced by a randomized greedy heuristic. We demonstrate the effectiveness of this approach in an extensive computational study. (C) 2006 Elsevier Ltd. All rights reserved.