A New Approach for Vehicle Routing with Stochastic Demand: Combining Route Assignment with Process Flexibility

Abstract

Motivated by logistical problems faced by a large supply chain software company, the paper, “A New Approach for Vehicle Routing with Stochastic Demand: Combining Route Assignment with Process Flexibility,” studies a vehicle routing problem where some routes are allowed to overlap. The paper proposes a class of simple and effective strategies to design overlapped routes with customer sharing, which combines ideas from the process flexibility in manufacturing and traditional vehicle routing literatures. Through theoretical analysis and numerical simulations, the paper illustrates the advantage of an overlapped routing strategy with a small amount of customer overlaps. In particular, it shows that such a strategy can provide consistent route assignments to drivers, while achieving a similar expected travel distance as the theoretical benchmark in the fully reoptimized setting. The strategy is in contrast to the traditional fixed routing strategy, which provides consistent route assignments to drivers, but incurs a much higher expected travel distance.