A hybrid heuristic for a stochastic production-inventory-routing problem

Abstract

We consider a stochastic single item production-inventory-routing problem with a single producer and multiple clients. At the clients, demand is allowed to be backlogged incurring a penalty cost. Demands are considered uncertain. A recourse model is presented where the production and routing decisions are taken before the scenario is known, and the quantities to deliver to the clients and the inventory levels are adjustable to the scenario. Valid inequalities are introduced and a hybrid heuristic that combines ideas from the sample average approximation method and from relax-and-fix approaches is proposed. Preliminary tests based on randomly generated instances are reported showing that the hybrid heuristic performs better than the classical sample approximation algorithm for hard instances.