An inventory routing problem for deteriorating items with dynamic demand and spoilage rate

Abstract

Inventory routing problems (IRP) are one of the important tools to be used for implementing vendor manage inventory. Many researchers try to develop methods for solving inventory routing problem, however, only a few develop methods for inventory routing problems for spoilage items. In reality, many items are deteriorated and spoil during transportation and storage period, but not many papers deal with them since they are hard to be modeled and solved. In this paper, we develop a model and methods to solve the inventory routing problem for deteriorating items with dynamic demand and spoilage rate. Demand varies and items spoil during planning periods. Those cases are more realistic since many commodities such as fruits and vegetables have dynamic demand and spoilage rate. A Genetic Algorithm and Particle Swarm Optimization are developed to solve the problem with various demands in a specific planning period since the problem in an Np-hard problem.
A numerical example and sensitivity analysis are conducted to verify the model and to get management insight into the model. The result is interesting and supports the general hypothesis that dynamic demands result in higher inventory costs than static demands and increasing demand results in increasing inventory costs. The results show that increasing demand and deteriorating rates significantly affect the total cost, therefore the developed model is important and significantly useful to be used for solving IRP with dynamic demand and spoilage items.