Enhanced Ant Colony Optimization for Inventory Routing Problem

The inventory routing problem (IRP) integrates and coordinates two important components of supply chain management which are transportation and inventory management. We consider a one-to-many IRP network for a finite planning horizon. The demand for each product is deterministic and time varying as well as a fleet of capacitated homogeneous vehicles, housed at a depot/warehouse, delivers the products from the warehouse to meet the demand specified by the customers in each period. The inventory holding cost is product specific and is incurred at the customer sites. The objective is to determine the amount of inventory and to construct a delivery routing that minimizes both the total transportation and inventory holding cost while ensuring each customer's demand is met over the planning horizon. The problem is formulated as a mixed integer programming problem and is solved using CPLEX 12.4 to get the lower and upper bound (best integer) for each instance considered. We propose an enhanced ant colony optimization (ACO) to solve the problem and the built route is improved by using local search. The computational experiments demonstrating the effectiveness of our approach is presented.