An Optimization model for multi-objective vehicle routing problem for perishable goods distribution

Abstract

Vehicle Routing Problem (VRP) is a well-studied area of operations research that has resulted in significant cost savings in global transportation. The primary goal of the VRP is to find the best route plan that minimizes the total distance traveled. The current study used VRP to solve the problem of fresh Agri products distribution in retail chains. With the advancement of computation power, researchers pay more attention to incorporating real-world characteristics when developing VRP, making it more practical for use in real-world applications. Existing literature identifies a research gap in richer problems that use real-world characteristics concurrently. This study created an integrated bi-objective VRP model that focused on resource optimization, order scheduling, and route optimization all at the same time. Two objectives aim to minimize distribution costs while ensuring product deliveries to retail outlets on time. To improve real-world applicability, the model incorporated multiple real-world characteristics simultaneously. All the algorithms were developed using an open-source optimization library called OR-tools. This research compared several heuristics and metaheuristic methods respectively, to obtain the IBFS (Initial Basic Feasible Solutions) and iterative improvements. Thereafter, best performing heuristic method (savings algorithms) and metaheuristic method (guided local search) were hybridized to develop the proposed two-phase solution method. All the solution algorithms and the developed VRP model were tested using the data obtained from one of the largest retail chains in Sri Lanka. Numerical experiments show the efficiency of the proposed solution algorithm in solving a real-world VRP problem. Further, numerical experiments show that the proposed VRP model has achieved a 16% saving in daily distribution cost while ensuring on-time deliveries to 95% of the retail outlets. Further, on-time deliveries of fresh Agri products ensure the freshness conditions. The developed VRP model is efficient to use as an operational planning tool for planning distribution operations in retail chains.