A New Approach for Vehicle Routing with Stochastic Demand: Combining Route Assignment with Process Flexibility
40 Pages Posted: 10 Aug 2020
Date Written: July 20, 2020
We propose a new approach for the vehicle routing problem with stochastic demands for the case in which customer demands are revealed before vehicles are dispatched. Our approach combines ideas from vehicle routing and manufacturing process flexibility to propose overlapped routing strategies with customer sharing. We characterize the asymptotic performance of the overlapped routing strategies under probabilistic analysis. Using the characterization, we demonstrate that our overlapped routing strategies perform close to the theoretical lower-bound derived from the reoptimization strategy, and significantly outperforms the routing strategy without overlapped routes. The effectiveness of the proposed overlapped routing strategies in non-asymptotic regimes is further verified through numerical analysis.
Keywords: stochastic capacitated vehicle routing, a priori route assignment, process flexibility, probabilistic analysis
JEL Classification: C61
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