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Effective Heuristics for Multiproduct Partial Shipment Models

School of Management, University of Texas at Dallas, Mail Station SM 30, Richardson, Texas 75083-0688
Johnson Graduate School of Management, Cornell University, Ithaca, New York
Tepper School of Business, Carnegie Mellon University, Pittsburgh, Pennsylvania
milind{at}utdallas.edu
sg337{at}cornell.edu
stayur{at}smartops.com

Motivated by real applications, we consider the problem of shipping products to multiple customers from limited inventory. After formulating the optimization problems under different restrictions on partial shipments, we find that commercially available packages, applied directly, are unsatisfactory, as are simple greedy approaches. We develop a scheme of heuristics that enables the user to select a good balance between computation time and effectiveness. A detailed computational study of one- and two-period industrial-sized problems indicates that these heuristics are computationally practical and generate solutions that are, on average, within 3%–4% of the optimum.

Subject classifications: partial shipments; integer programming models; heuristics.
History: Received October 2003; revision received December 2004; accepted January 2005.