Data-driven evolutionary computation for service constrained inventory optimization in multi-echelon supply chains

Abstract

Supply chain digital twin has emerged as a powerful tool in studying the behavior of an actual supply chain. However, most studies in the field of supply chain digital twin have only focused on what-if analysis that compares several different scenarios. This study proposes a data-driven evolutionary algorithm to efficiently solve the service constrained inventory optimization problem using historical data that generated by supply chain digital twins. The objective is to minimize the total costs while satisfying the required service level for a supply chain. The random forest algorithm is used to build surrogate models which can be used to estimate the total costs and service level in a supply chain. The surrogate models are optimized by an ensemble approach-based differential evolution algorithm which can adaptively use different search strategies to improve the performance during the computation process. A three-echelon supply chain digital twin on the geographic information system (GIS) map in real-time is used to examine the efficiency of the proposed method. The experimental results indicate that the data-driven evolutionary algorithm can reduce the total costs and maintain the required service level. The finding suggests that our proposed method can learn from the historical data and generate better inventory policies for a supply chain digital twin.