Title: A combined inventory routing and game theory approach to solve a real-life distribution problem

Authors: Manuel Mateo; El-Houssaine Aghezzaf; Pau Vinyes

Addresses: Universitat Politècnica de Catalunya (UPC), Avda. Diagonal 647, p7, 08028 Barcelona, Spain. ' Department of Industrial Management (EA18), Faculty of Engineering, Ghent University, UGent, Technologiepark 903, Zwijnaarde 9052, Belgium. ' Universitat Politècnica de Catalunya (UPC), Avda. Diagonal 647, p7, 08028 Barcelona, Spain

Abstract: In this paper, we discuss a solution approach combining inventory routing and game theory to optimise logistical costs in a real-life distribution system. The problem consists in developing a distribution plan to replenish inventory at each of the involved sales-points, and then clustering them in groups willing to cooperate and share parts of their stocks. The distribution strategy and clustering should be achieved in a way that minimises total distribution and inventory costs of the system. Clearly, cooperation inside each cluster increases the extra potential inventory to which each member of the cluster has access, without having to support the related cost. As a result, the service level that each of these sales-point may achieve would increase. This approach is implemented for a real-life supply chain. A part of obtained results are reported and discussed in the paper.

Keywords: inventory routing; game theory; case study; logistics costs; distribution planning; clustering; supply chain cooperation; supply chain management; SCM.

DOI: 10.1504/IJBPSCM.2012.044975

International Journal of Business Performance and Supply Chain Modelling, 2012 Vol.4 No.1, pp.75 - 89

Published online: 11 Aug 2014 *

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