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Abstract

A company faces a variant of Period Vehicle Routing Problem (PVRP). Because of seasonal fluctuation in demand, the company outsources delivery to avoid maintaining excess vehicles or facing vehicle shortages. Customer orders can be classified into two groups, those that must be satisfied within two days, and those that must be fulfilled within three days. Currently, the company satisfies most orders the next day based on experience rather than any formal system. The objective of the studied company is to satisfy all received orders and minimize monthly transportation costs. This study proposes two short term strategies for the studied company. Both the mathematical programming model and heuristic algorithms are developed to compare the performance of the two strategies. Extensive computational results are provided based on real world data. The proposed strategies achieve promising savings in transportation costs.

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