Using truck-inventory-cost to obtain solutions to multi-period logistics models

The antithetic opposition between the cost of inventory and the fixed cost of transportation, which leads to multiple alternate near-optima, can be a primary contributor to the computational intractability of the mixed integer program for a two-echelon multi-period distribution system. To alleviate the computational intractability, we develop a heuristic procedure that determines the deployments of trucks to, and the consequent levels of inventory at, the second echelon thereby reducing the number of variables in the model. The reduced model is shown to identify near optimal solutions for the entire distribution system in negligible computation time.

► We use a heuristic to alleviate computational intractability of a multi-period logistics model. ► Truck-inventory-cost is used to address the tradeoff in inventory and logistics costs. ► We develop a heuristic using truck-inventory-cost for model variable reduction. ► Near optimal solutions for the model are found in negligible computation time.