Dynamic Evolution Analysis of ITIO Based on Transport Flexibility and Limited Rationality

Abstract

One of the most common problems in supply chain management is minimizing transportation and inventory costs. Inventory and transportation are the two main components of logistical costs, which account for the majority of an enterprise's logistical expenses. Inventory-Transportation Integrated Optimization (ITIO) is concerned with the distribution of a single product from a single facility (depot) to a set of geographically dispersed customers over a given planning horizon. In this paper, we develop degenerative earning matrixes under bounded rationality in accordance with the characteristics of an ITIO problem in a "many to many" distribution system, gain replicator dynamics of the two sides and solve the ESS. First, we describe the problem of ITIO. Second, this paper presents the ITIO model which considers the transport flexibility. Third, we analyze the replicator dynamics and evolutionary stability analysis of ITIO. Forth, this paper gives computational results to validate the thesis conclusions. And then concludes the paper with some remarks. This study concluded that the choices of retailers with bounded rationality depend on the choices of suppliers with perfect rationality. The conclusion states that the ESS of a retailer with bounded rationality and imperfect information is the same as a retailer with perfect rationality and perfect information.