Abstract. In this paper, the PIDRP is modelled as a one-to-many distribution system, in which a single warehouse or production facility is responsible for restocking a set of customers whose demands are deterministic and time-varying. The demand can be satisfied from either inventory held at the customer sites or from daily production. A fleet of homogeneous capacitated vehicles for making the deliveries is also considered. Capacity constraints for the inventory are given for each customer and the demand must be fulfilled on time, without delay. The aim of solving the PIDRP model is to minimize the overall cost of coordinating the production, inventory and transportation over a finite planning horizon. We propose an iterative procedure commonly known as MatHeuristic algorithm, an optimization algorithm designed by the interpolation of metaheuristics and mathematical programming techniques, to solve the model. In Phase 1, we construct routes in each period with the assumption that all the demands are satisfied in the given period by Variable Neighborhood Search, then the mixed integer programming is solved in Phase 2 to obtain the production schedules, quantity to be delivered and the inventory levels at the production facility and the customer sites. Based on the output from Phase 2, the routes are improved and the algorithm iterates until some stopping criteria is met. The model is solved by using Concert Technology of CPLEX 12.5 Optimizers with Microsoft Visual C++ 2010. Computational experiment is conducted to test the effectiveness of the algorithm. We observed that our algorithm performs better compared to the best integer solution obtained from CPLEX.