The one-warehouse multi-retailer problem: reformulation, classification, and computational results

Abstract

We consider the one-warehouse multi-retailer problem where a warehouse replenishes multiple retailers with deterministic dynamic demands over a horizon. The problem is to determine when and how much to order to the warehouse and retailers such that the total system-wide costs are minimized. We propose a new (combined transportation and shortest path based) integer programming reformulation for the problem in addition to the echelon stock and transportation based formulations in the literature. We analyze the strength of the LP relaxations of three formulations and show that the new formulation is stronger than others. We also show that the new and transportation based formulations are equivalent for the joint replenishment problem, where the warehouse is a crossdocking facility. We extend all formulations to the case with initial inventory at the warehouse and reveal the relation among their LP relaxations. We present our computational experiments with all formulations over a set of randomly generated test instances.