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A multi-phase heuristic for the production routing problem

2017-11-01
Solyali, Oguz
Süral, Haldun
This study considers the production routing problem where a plant produces and distributes a single item to multiple retailers over a multi-period time horizon. The problem is to decide on when and how much to produce and stock at the plant, when and how much to serve and stock at each retailer, and vehicle routes for shipments such that the sum of fixed production setup cost, variable production cost, distribution cost, and inventory carrying cost at the plant and retailers is minimized. A multi-phase heuristic is proposed for the problem. The proposed heuristic is a mathematical programming-based heuristic that relies on formulating and solving restricted versions of the problem as mixed integer programs. The computational experiments on benchmark instances show favorable results with regard to the quality of the solutions found at the expense of higher computing times on large instances. In particular, the heuristic managed to find new best solutions for the 65% of benchmark instances.