A New Approach for Vehicle Routing with Stochastic Demand: Combining Route Assignment with Process Flexibility

40 Pages Posted: 10 Aug 2020

See all articles by Kirby Ledvina

Kirby Ledvina

Massachusetts Institute of Technology (MIT) - Department of Civil and Environmental Engineering

Hanzhang Qin

Massachusetts Institute of Technology (MIT) - Center for Computational Engineering

David Simchi-Levi

Massachusetts Institute of Technology (MIT) - School of Engineering

Yehua Wei

Decision Sciences Area, Fuqua School of Business, Duke University

Date Written: July 20, 2020

Abstract

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

Suggested Citation

Ledvina, Kirby and Qin, Hanzhang and Simchi-Levi, David and Wei, Yehua, A New Approach for Vehicle Routing with Stochastic Demand: Combining Route Assignment with Process Flexibility (July 20, 2020). Available at SSRN: https://ssrn.com/abstract=3656374 or http://dx.doi.org/10.2139/ssrn.3656374

Kirby Ledvina

Massachusetts Institute of Technology (MIT) - Department of Civil and Environmental Engineering ( email )

77 Massachusetts Avenue
Room 1-290
Cambridge, MA 02139-4307
United States

Hanzhang Qin

Massachusetts Institute of Technology (MIT) - Center for Computational Engineering ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

David Simchi-Levi

Massachusetts Institute of Technology (MIT) - School of Engineering ( email )

MA
United States

Yehua Wei (Contact Author)

Decision Sciences Area, Fuqua School of Business, Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

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