Performance Measurement for Inventory Routing

Jin-Hwa Song, Martin Savelsbergh
2007 Transportation Science  
An important reason for companies to introduce vendor managed inventory programs is to eliminate distribution inefficiencies occurring due to the timing of customers' orders. By managing their customers' inventories suppliers may be able to reduce demand variability and therefore distribution costs. We develop technology to measure the effectiveness of distribution strategies. Popular practical performance measures, such as volume delivered per mile, are effective in measuring relative
more » ... ce, but inadequate to measure absolute performance. We develop a methodology that allows the computation of tight lower bounds on the total mileage required to satisfy customer demand over a period of time. As a result companies will be able to gain insight into the effectiveness of their distribution strategy.
doi:10.1287/trsc.1060.0175 fatcat:r6mhmt6hybcelinzwvfu7afixy