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A Stochastic Vehicle Routing Problem with Travel Time Uncertainty: Trade-Off Between Cost and Customer Service

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Abstract

On-time shipment delivery is critical for just-in-time production and quick response logistics. Due to uncertainties in travel and service times, on-time arrival probability of vehicles at customer locations can not be ensured. Therefore, on-time shipment delivery is a challenging job for carriers in congested road networks. In this paper, such on-time shipment delivery problems are formulated as a stochastic vehicle routing problem with soft time windows under travel and service time uncertainties. A new stochastic programming model is proposed to minimize carrier’s total cost, while guaranteeing a minimum on-time arrival probability at each customer location. The aim of this model is to find a good trade-off between carrier’s total cost and customer service level. To solve the proposed model, an iterated tabu search heuristic algorithm was developed, incorporating a route reduction mechanism. A discrete approximation method is proposed for generating arrival time distributions of vehicles in the presence of time windows. Several numerical examples were conducted to demonstrate the applicability of the proposed model and solution algorithm.

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Acknowledgments

The work described in this paper was jointly supported by a research grant from the Research Grants Council of the Hong Kong Special Administrative Region, China (Project No. PolyU 5196/10E) and a research grant from the National Science Foundation of China (41201466). The first author is sponsored by a Postgraduate Stipend of the Hong Kong Polytechnic University. Thanks are due to two anonymous reviewers for their valuable comments that improved both the content and presentation of the paper.

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Authors and Affiliations

  1. Department of Civil and Environmental Engineering, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong

    Junlong Zhang, William H. K. Lam & Bi Yu Chen

  2. State Key Laboratory of Information Engineering in Surveying, Mapping and Remote Sensing, Wuhan University, Wuhan, 430079, China

    Bi Yu Chen

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  1. Junlong Zhang
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  2. William H. K. Lam
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  3. Bi Yu Chen
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Correspondence to Junlong Zhang.

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Zhang, J., Lam, W.H.K. & Chen, B.Y. A Stochastic Vehicle Routing Problem with Travel Time Uncertainty: Trade-Off Between Cost and Customer Service. Netw Spat Econ 13, 471–496 (2013). https://doi.org/10.1007/s11067-013-9190-x

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