A Simulation Modelling Approach for Selection of Inventory Policy in a Supply Chain

This paper copes with a joint Location-Allocation-Inventory problem in a three-echelon base-level spare part support system with epistemic uncertainty in uncertain demands of bases. The aim of the paper is to propose an optimization model under the uncertainty theory to minimize the total cost, which integrates crucial characterizations of the inventory control decisions and the location-allocation scheme arrangement under a periodic review order-up-to-S (T, S) policy. Uncertainty theory is introduced in this paper to characterize epistemic uncertainty, where demands are treated as uncertain variables and stockout loss is represented by value-at-risk in uncertain measurement. To solve the original uncertain optimization model, an equivalent deterministic model is derived and addressed by an improved bilevel genetic algorithm. Moreover, the proposed models and algorithm are encoded into numerical examples for supply chain programming. The results highlight the applicability of the model and the algorithm’s effectiveness in approaching the optimal solution compared with traditional genetic algorithm. Sensitivity analyses are further made for the impacts of review time and inventory capacity on different cost components.

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Determination of Inventory System Service Level by Simulation in Cases of Constant and Variable Demand and Lead Time

Aslan

2023

Advances in Logistics, Operations, and Management Science

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Service level and standard deviation of demand and/or lead time is considered while calculating reorder point with safety stock if the demand and/or lead time vary. This study explores whether reorder point provides desired service level. To answer the question, a simulation model is developed in MS Excel for three different cases of constant/variable demand and lead time. The model has been executed for certain periods, and service level is calculated as 1 (number of backorders/number of order cycles). It is found that the calculated service level for Case 1 was significantly higher than the desired service level, while the calculated service level for Case 2 and Case 3 was slightly lower than the desired service level. The reason for the difference in Case 1 is investigated. After eliminating factors from the model, a mechanism was added to the discrete model to simulate the continuity of the system. This minimized the difference in Case 1, but the difference in Case 2 and Case 3 increased slightly.

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A Simulation Modelling Approach for Selection of Inventory Policy in a Supply Chain

Cited by 3 publications

References 8 publications

Modeling and Analyzing the Inventory Level for Demand Uncertainty in the VUCA World: Evidence From Biomedical Manufacturer

Modeling and Analyzing the Inventory Level for Demand Uncertainty in the VUCA World: Evidence From Biomedical Manufacturer

A Joint Location–Allocation–Inventory Spare Part Optimization Model for Base-Level Support System with Uncertain Demands

Determination of Inventory System Service Level by Simulation in Cases of Constant and Variable Demand and Lead Time

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