A combined inventory routing and game theory approach for a real-world distribution problem

In this paper, we develop a solution approach combining inventory routing and game theory and discuss it application to solve a real-world distribution and logistics problem. The problem consists of developing a distribution plan to replenish inventory at the involved sales-points and then clustering these sales-points into groups willing to cooperate and share a part of their stocks. The distribution and clustering strategies should be developed in such a way so as to minimize distribution and inventory costs of the system. The cooperation inside each cluster increases the potential inventory to which each member of this cluster has access. This enhances, in turn, the service level of each sales-point. The approach is implemented for a real-life case and the obtained results are reported and discussed in this paper.