Inventory Routing

The Inventory Routing Problem (IRP) is an optimization problem that jointly determines inventory levels at customer locations, delivery routes, and shipment quantities to minimize total logistics and inventory holding costs. Rather than treating inventory management and vehicle routing as separate decisions, IRP recognizes that they are interdependent: larger shipments reduce routing costs but increase inventory holding costs, and vice versa. IRP is solved using mixed-integer programming, heuristics, and metaheuristics, and is a cornerstone of vendor-managed inventory (VMI) programs.