Optimization of simulated inventory systems: optquest and alternatives

Jack P.C. Kleijnen and Jie Wan
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Jie Wan: Tilburg University, Center for Economic Research

No 75, Discussion Paper from Tilburg University, Center for Economic Research

Abstract: This article illustrates simulation optimization through an (s, S) inventory management system. In this system, the goal function to be minimized is the expected value of specific inventory costs. Moreover, specific constraints must be satisfied for some random simulation responses, namely the service or fill rate, and for some deterministic simulation inputs, namely the constraint s < S. Results are reported for three optimization methods, including the popular OptQuest method. The optimality of the resulting solutions is tested through the so-called Karesh-Kuhn-Tucker (KKT) conditions.

JEL-codes: C0 C1 C9 C15 C44 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec and nep-cmp
Date: 2006
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