A simulation optimization approach for a two-echelon inventory system with service level constraints

Shing Chih Tsai and Ya-Xin Zheng

European Journal of Operational Research, 2013, vol. 229, issue 2, 364-374

Abstract: In this paper, we present a simulation optimization algorithm for solving the two-echelon constrained inventory problem. The goal is to determine the optimal setting of stocking levels to minimize the total inventory investment costs while satisfying the expected response time targets for each field depot. The proposed algorithm is more adaptive than ordinary optimization algorithms, and can be applied to any multi-item multi-echelon inventory system, where the cost structure and service level function resemble what we assume. Empirical studies are performed to compare the efficiency of the proposed algorithms with other existing simulation algorithms.

Keywords: Inventory; Multi-echelon system; Service-level constraints; Feasibility check; Stochastic optimization; Simulation (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:229:y:2013:i:2:p:364-374

DOI: 10.1016/j.ejor.2013.03.010

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