Quantifying the benefits of route reoptimisation under stochastic customerdemands

Incorporating route reoptimisation in the management of vehicle routing ope rations under stochastic demands yields benefits such as lower transportati on and inventory costs. Because an investment in advanced information syste ms is indispensable for route reoptimisation, a firm needs to estimate the likely magnitude of these benefits before making an investment decision. Th is study addresses this information needed by providing a framework to asse ss the benefits more completely than previous studies. The framework, which is the key contribution of the research, comprises a set: of tractable mod els that together address the costs of both inventory and transportation. B y accounting for key determinants of route reoptimisation's benefits, inclu ding, for example, the volatility of customer demands, the models are appli cable to a broad range of vehicle routing scenarios.