Vehicle routing problem with time windows considering overtime and outsourcing vehicles

The vehicle routing problem with time windows (VRPTW) is an important problem in third-party logistics and supply chain management. We extend the VRPTW to the VRPTW with overtime and outsourcing vehicles (VRPTWOV), which allows overtime for drivers and the possibility of using outsourced vehicles. This problem can be applied to third-party logistics companies for managing central distributor-local distributors, local distributor-retailers (or customers), and manufacturers. We developed a mixed integer programming model, a genetic algorithm (GA), and a hybrid algorithm based on simulated annealing. The computational results demonstrate the efficiency of the developed algorithms. We also develop a decision support system for the VRPTWOV that is equipped with a vehicle route rescheduling function for realistic situations based on the GA. (C) 2012 Elsevier Ltd. All rights reserved.