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Performance Measurement for Inventory Routing

The Logistics Institute, School of Industrial and Systems Engineering, Georgia Institute of Technology, Atlanta, Georgia 30332-0205
The Logistics Institute, School of Industrial and Systems Engineering, Georgia Institute of Technology, Atlanta, Georgia 30332-0205
jhsong{at}isye.gatech.edu
mwps{at}isye.gatech.edu

We develop technology to measure the effectiveness of distribution strategies for inventory routing. Popular, practical performance measures, such as volume delivered per mile, are effective in measuring relative performance but inadequate in measuring absolute performance. We develop a methodology that allows the computation of tight lower bounds on the total mileage required to satisfy customer demand over time. As a result, companies will be able to gain insight into the effectiveness of their distribution strategy.

Key Words: inventory routing; performance measurement; linear programming
History: Received: March 2004; revised: May 2005; accepted: June 2005.

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