A model to take advantage of Physical Internet for vendor inventory management

Un modèle de gestion de stock en avantage de l'Internet Physique pour les vendeurs

Yanyan Yang (), Shenle Pan () and Eric Ballot ()
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Yanyan Yang: CGS i3 - Centre de Gestion Scientifique i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris Sciences et Lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique
Shenle Pan: CGS i3 - Centre de Gestion Scientifique i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris Sciences et Lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique
Eric Ballot: CGS i3 - Centre de Gestion Scientifique i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris Sciences et Lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique

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Abstract: This paper investigates inventory management problems for fast-moving consumer goods (FMCG) with the Physical Internet (interconnected logistic services) where goods are stored and distributed in an interconnected and open network of hubs. Unlike current hierarchical inventory model where the source assignment is predetermined for each replenishment order either from the retailers or from the warehouses, the PI-inventory model enables multiple source selection options to each order and transshipments of inventories among hubs, resulting in complete pooling of inventories within the network. We adopt a continuous review (Q, R) ordering policy for each facility and propose four dynamic source selection strategies related to the supplying nodes' inventory levels, the distance and lead time between the supplying and the ordering nodes. The objective is to determine the optimal replenishment policies for hubs in order to minimize the total logistic costs of the distribution system. A nonlinear optimization model is proposed and a heuristic using simulated annealing is applied. A simulation study based on two categories of FMCG is taken to evaluate the performance of the proposed inventory control policies. Our results suggest that compared to current centralized inventory control policy, the PI-inventory control model with proposed source selection strategies can significantly reduce the total costs as well as the average inventory level of the network of hubs while reaching the same end customer service level.

Keywords: multiple sourcing; Physical Internet; Inventory control; FMCG; dynamic source selection (search for similar items in EconPapers)
Date: 2015-05-11
Note: View the original document on HAL open archive server: https://minesparis-psl.hal.science/hal-01128761v1
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Citations: View citations in EconPapers (3)

Published in 2015 IFAC Symposium on Information Control in Manufacturing (INCOM 2015), May 2015, Ottawa, Canada

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