Setting safety stocks in multi-stage inventory systems under rolling horizon mathematical programming models

Youssef Boulaksil (y.boulaksil@tue.nl), Jan C. Fransoo (j.c.fransoo@tue.nl) and Ernico N. G. van Halm (ernico.vanhalm@organon.com)
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Youssef Boulaksil: Technische Universiteit Eindhoven
Jan C. Fransoo: Technische Universiteit Eindhoven
Ernico N. G. van Halm: Organon N.V.

A chapter in Supply Chain Planning, 2009, pp 199-218 from Springer

Abstract: Abstract This paper considers the problem of determining safety stocks in multi-item multi-stage inventory systems that face demand uncertainties. Safety stocks are necessary to make the supply chain, which is driven by forecasts of customer orders, responsive to (demand) uncertainties and to achieve predefined target service levels. Although there exists a large body of literature on determining safety stock levels, this literature does not provide an effective methodology that can address complex multi-constrained supply chains. In this paper, the problem of determining safety stocks is addressed by a simulation based approach, where the simulation studies are based on solving the supply chain planning problem (formulated as a mathematical programming model) in a rolling horizon setting. To demonstrate the utility of the proposed approach, an application of the approach at Organon, a worldwide operating biopharmaceutical company, will be discussed.

Keywords: Safety stocks; Advanced planning and scheduling; Simulation; Supply chain planning; Organon (search for similar items in EconPapers)
Date: 2009
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DOI: 10.1007/978-3-540-93775-3_8

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