An Integrated Inventory and Order Pick-up Model Considering the Capacities of Vendors, the Limited Number of Vehicles, and the Duration of Vehicle Trips for the Multi-Vendor Single-Buyer (MVSB) System

Abstract

Collaboration that is mutually beneficial between vendors and buyers to minimize inventory and pick-up costs is the basis for developing an integrated inventory and order pick-up model, known as inbound inventory routing problems (IIRP). Unfortunately, the IIRP model developed so far does not consider several conditions found in the manufacturing industry, including vendors’ limited capacities, limited number of vehicles, and duration of vehicle trips. Based on these conditions, this study aims to develop an integrated inventory and order pick-up model that considers vendors’ limited capacity, limited number of vehicles, and duration of vehicle trips for the Multi-Vendor Single-Buyer (MVSB) system. The total relevant costs, consisting of set-up, ordering, holding, and pick-up, are kept to a minimum. The model developed in this study is classified as mixed-integer non-linear programming (MINLP), which is hard to solve using an analytic or exact approach. So, a proposed algorithm using ant colony optimization (ACO) was developed to solve the problem. Model testing was carried out by developing three types of numerical examples: small, medium, and large-scale problems. The results obtained show that the proposed algorithm can find the best solution in a realistic amount of time.