On determining and applying optimal control strategies for optimal delivery of goods to a network of retailers based on inventory levels

The problem of delivering goods from a central storage warehouse to a network of retailers distributed over the territory is considered in this paper. It belongs to the class of Inventory-Routing Problems (IRP), since decisions concerning the set of retailers to be visited, the sequence in accordance with the retailers are visited, and the amount of goods to be delivered to the retailers are taken on the basis of the stock of goods (inventory level) at the retailers. The proposed methodology allows determining optimal control strategies and updating them in real-time, on the basis of the actual measurements of inventory levels provided by the retailers. It belongs to the class of Vendor-Managed Inventory (VMI) approaches, as replenishment decisions are taken by the vendor, and consists of an “off-line phase”, to be accomplished daily before the beginning of the delivery process, and of an “on-line phase”, to be carried out at the start of the trip and at the end of each delivery.