Simultaneous control of vehicle routing and inventory for dynamic inbound supply chain

• A new methodology is developed to control inventory and vehicle routing at the same time for dynamic inbound supply chain.
• The proposed vendor-based vehicle routing system generates a vehicle routing plan using production plans and other setup data.
• A goal model for vehicle routing system is also developed using transportation cost, penalty cost for exceeding a stock level limitation, and transportation efficiency.
• Performance of the proposed approach is evaluated through a simulation study with real data from an LCD manufacturing company in Korea.

This paper investigates inbound logistics for an OEM (Original Equipment Manufacturing) manufacturer, who aims at short production time and JIT policy. In such a case, it can be argued that the inbound vehicle routing schedule should be combined with incoming parts inventory control. In this paper, we propose a simultaneous control method of combining vehicle scheduling and inventory control for such dynamic inbound logistics. For the transportation control, a vehicle routing system, in which delivery jobs are made with shipments of one supplier, is proposed to generate a vehicle routes plan by considering production start time, travel time, waiting time, and loading/unloading time. To evaluate the performance of the generated vehicle routing plan, a goal model is also developed by considering vehicle operating cost, stock level exceeding penalty, and transportation efficiency. A generated vehicle routing plan can be rejected when the stock level is over the capacity and an appropriate number of vehicles for its manufacturing environment can be determined. Using real data from an LCD firm, a simulation study is conducted. The simulation results indicate that the simultaneous control approach requires fewer vehicles than the existing system and shows better efficiency of transportation. This method can also be used to determine the appropriate incoming part inventory level or the number of vehicles required in dynamic inbound logistics.