A simulation–optimization approach for a service-constrained multi-echelon distribution network

Marije Noordhoek, Wout Dullaert, David S.W. Lai and Sander de Leeuw

Transportation Research Part E: Logistics and Transportation Review, 2018, vol. 114, issue C, 292-311

Abstract: Academic research on (s,S) inventory policies for multi-echelon distribution networks with deterministic lead times, backordering, and fill rate constraints is limited. Inspired by a real-life Dutch food retail case we develop a simulation-optimization approach to optimize (s,S) inventory policies in such a setting. We compare the performance of a Nested Bisection Search (NBS) and a novel Scatter Search (SS) metaheuristic using 1280 instances from literature and we derive managerial implications from a real-life case. Results show that the SS outperforms the NBS on solution quality. Additionally, supply chain costs can be saved by allowing lower fill rates at upstream echelons.

Keywords: Supply chain performance; Multi-echelon inventory; Metaheuristics; Service-constrained; Simulation-optimization; Scatter search (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (5)

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DOI: 10.1016/j.tre.2018.02.006

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