A branch-and-price algorithm for an integrated production and inventory routing problem

With globalization, the need to better integrate production and distribution decisions has become ever more pressing for manufacturers trying to streamline their supply chain. This paper investigates a previously developed mixed-integer programming (MIP) model aimed at minimizing production, inventory, and delivery costs across the various stages of the system. The problem being modeled includes a single production facility, a set of customers with time varying demand, a finite planning horizon, and a fleet of homogeneous vehicles. Demand can be satisfied from either inventory held at a customer site or from daily product distribution. Whether a customer is visited on a particular day is determined by an implicit tradeoff between inventory and distribution costs. Once the decision is made, a vehicle routing problem must be solved for those customers who are scheduled for a delivery. A hybrid methodology that combines exact and heuristic procedures within a branch-and-price framework is developed to solve the underlying MIP. The approach takes advantage of the efficiency of heuristics and the precision of branch and price. Implementation required devising a new branching strategy to accommodate the unique degeneracy characteristics of the master problem, and a new procedure for handling symmetry. A novel column generation heuristic and a rounding heuristic were also implemented to improve algorithmic efficiency. Computational testing on standard data sets showed that the hybrid scheme can solve instances with up to 50 customers and 8 time periods within 1 h. This level of performance could not be matched by either CPLEX or standard branch and price alone. (C) 2010 Elsevier Ltd. All rights reserved.