A Simulation Framework for Real-Time Management and Control of Inventory Routing Decisions

We consider a logistics network where a single warehouse distributes a single item to multiple retailers. Retailers in the network participate in a vendor managed inventory (VMI) program with the warehouse, where the warehouse is responsible for tracking and replenishing the inventory at various retailer locations. The information update occurs every time a vehicle reaches a location and the decision on the delivery quantity and the next location to visit is made. For a small increase of locations in the network, the state space for the solution increases exponentially, making this problem NP-hard. Thus, we propose a solution methodology where in the size of the state space is reduced at each stage. In this work, we use simulation to develop the framework for the real-time control and management of inventory and routing decisions, given this scenario