Flexible Milk-Runs for Stochastic Vehicle Routing

We study a vehicle routing problem with stochastic demands in which the goal is to findan optimal set of vehicle routes, such that the capacity of each vehicle is not exceeded witha given probability. We introduce ‘flexible milk-runs’, or flex-runs, to model this problemas a set covering problem to find (near-)optimal solutions. We apply our methodology todesign new freight routes for the North-American division of the Bosch/Siemens Home Ap-pliances Corporation. Our computational experiments indicate an expected transportationcost reduction of up to 25%, while at the same time the new routes realize overall increasein robustness with respect to demand fluctuations.Key words: stochastic vehicle routing; column generation; real-world applicationHistory:

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