An important aspect of supply chain management is the co ordination of logistical operations for the transport of products within the supply chain. The task of designing delivery (or pickup) routes to service customers in a company’s supply chain is known in the literature as a vehicle routing problem (VRP). The Vehicle Routing Problem is a generic name given to a whole class of problems in which a set of routes for a fleet of vehicles based at one or several depots must be determined for a number of geographically dispersed cities or customers. The objective of the VRP is to deliver a set of customers with known demands on minimum-cost vehicle routes originating and terminating at a depot.
An instance of a VRP (left) and its solution (right)
Vehicle Routing Problems have been extensively analyzed to reduce transportation costs. The problem is to find a policy for routing the service vehicle that minimizes the average time demands spent in the system.
The elements of VRP are:
- Transport Network – A network of roads, streets, railways.
- Vehicles – Group of motor vehicles owned or leased by a business.
- Customers/ Suppliers -Important to determinate the location of all our customers.
- Warehouse – Storage of goods.
- Routes – Select the best routes possible.