Capacitated vehicle routing problem with windows for inventory replenishmet: A case study of highlands coffee

Abstract

Highlands Coffee, one of Vietnam's most popular coffee chains, is currently dealing with inefficiencies in the supply chain and inventory control at stores. The root cause of this scenario is that inventory replenishment planning in each store has not been optimal because many stores have not applied the Periodic Automatic Replacement (PAR) in the ordering process appropriately with respect to the characteristics of the products in store. This has resulted in over- or under-stocking of the inventory, which is not good for the F&B industry, whose nature is dealing with perishable goods. As a result, Highlands Coffee faces penalties for food waste and sales loss quite frequently. This paper focuses on improving the Highlands Coffee supply chain, specifically in Thu Duc City, Binh Thanh District, and District 1, by specifying the delivery quantity for each store and solving the Capacitated Vehicle Routing Problem with Time Windows (CVRPTW). The store inventory will also be reckoned in advance based on the PAR level, using each store's weekly demand. In this paper, mixed integer programming with multiple objectives will be employed to solve the CVRPTW for the homogeneous fleet of vehicles with a single depot via CPLEX. The expected outputs are the amount of inventory that needs to be replenished in each store, as well as the optimal routes with the minimum total distance and the number of vehicles used, taking into account vehicle capacity, time window, and other company constraints