An improved heuristic algorithm for the problem of inventory —transportation integrated optimization

VMI (vendor managed inventory) policy coordinates effectively the antinomy between the inventory and the transportation within logistics distribution system. Under VMI mode, integrating inventory and transportation of the supplier and the demander as a whole is considered to achieve the optimization of total distribution cost. In view of typical one-warehouse multiretailer distribution network in the modern distribution logistics system, the mathematic model on the inventory-transportation integrated optimization problem with stochastic demand and many products is established by using a bilevel programming method; and an improved heuristic algorithm is designed to solve the problem; and then, numerical examples are given to show that the inventory-transportation integrated optimization between the supplier and the demander makes for decreasing total cost of distribution system.