Decomposing inventory routing problems with approximate value functions

Authors

  • Alejandro Toriello,

    Corresponding author
    1. Daniel J. Epstein Department of Industrial and Systems Engineering, University of Southern California, Los Angeles, California 90089
    • Daniel J. Epstein Department of Industrial and Systems Engineering, University of Southern California, Los Angeles, California 90089
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  • George Nemhauser,

    1. H. Milton Stewart School of Industrial and Systems Engineering, Georgia Institute of Technology, Atlanta, Georgia 30332
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  • Martin Savelsbergh

    1. CSIRO Mathematics, Informatics and Statistics, North Ryde, New South Wales 1670, Australia
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Abstract

We present a time decomposition for inventory routing problems. The methodology is based on valuing inventory with a concave piecewise linear function and then combining solutions to single-period subproblems using dynamic programming techniques. Computational experiments show that the resulting value function accurately captures the inventory's value, and solving the multiperiod problem as a sequence of single-period subproblems drastically decreases computational time without sacrificing solution quality. © 2010 Wiley Periodicals, Inc. Naval Research Logistics, 2010

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