Abstract
A new model and its solving procedure for the commodity distribution system consisting of inventory facilities such as distribution centers or warehouses and consumer points are discussed. In this paper, demands of the consumer points are assumed to be random variables which have known probability distribution, and an integrated model is built, where both of fixed reorder quantity policy model which is one of the typical inventory policies and transportation model are considered simultaneously. The problem is formulated as an optimization problem to minimize the total of inventory related costs and transportation costs. That is, it is formulated as a 0-1 mixed integer programming problem including nonlinear function, and an algorithm based on the branch and bound method is developed, where the lower bound can be calculated by decomposition of the problem. Meaning and validity of the proposed model are made clear by a numerical example.
