In this paper we introduce a robust optimization approach to solve the Vehicle Routing Problem (VRP) with demand uncertainty.This approach yields routes that minimize transportation costs while satisfying all demands in a given bounded uncertainty set. We show that for the Miller–Tucker–Zemlin formulation of the VRP and specific uncertainty sets, solving for the robust solution is no more difficult than solving a single deterministic VRP.Our computational results on benchmark instances and on families of clustered instances show that the robust solution can protect from unmet demand while incurring a small additional cost over deterministic optimal routes.This is most pronounced for clustered instances under moderate uncertainty,where remaining vehicle capacity is used to protect against variations within each cluster at a small additional cost. We compare the robust optimization model with classic stochastic VRP models for this problem to illustrate the differences and similarities between them. We also observe that the robust solution amounts to a clever management of the remaining vehicle capacity compared to uniformly and non-uniformly distributing this slack over the vehicles.
Keywords:Robust optimization,vehicle routing,demand uncertainty
1.Introduction
Many industrial applications deal with the problem of routing a fleet of vehicles from a depot to service a set of customers that are geographically dispersed.This type of problem is faced daily by courier services (e.g.,Federal Express,United Parcel Service and the Overnight United States Postal Service), local trucking companies and demand responsive transportation services,just to name a few.The setypes of services have experienced tremendous growth inrecent years.For example, both United Parcel Service and the Federal Express have annual revenue of well over $10 billion,and the dial-a-ride service for the disabled and handicapped is today a $ 1.2 billionin dustry (Palmer etal.,2004).However, congestion and variability in demand and travel times affects these industries on three major service dimensions: (i) travel time; (ii) reliability; and (iii) cost (Meyer,1996). Therefore, there is a need to develop routing and scheduling tools that directly account for the uncertainty.In this paper,we focuson the uncertainty in demand.