A savings analysis of horizontal collaboration among VMI suppliers

This paper considers a logistics distribution network with multiple suppliers that each replenish a set of retailers having constant demand rates. The underlying optimization problem is the Cyclic Inventory Routing Problem (CIRP), for which a heuristic solution method is developed. Further, horizontal collaboration through a third party Logistics Service Provider (LSP) is considered and the collaborative savings potential is analyzed. A design of experiments is performed to evaluate the impact of some relevant cost and network structure factors on the collaborative savings potential. The results from the design of experiments show that for some factor combinations there is in fact no significant savings potential