Title: A tutorial to set safety stock under guaranteed-service time by dynamic programming

Authors: Luis A. Moncayo-Martínez; Adan Ramirez-López

Addresses: V. Carranza # 2400, Col. Tecnológico, C.P. 25280 Saltillo, Coahuila, México ' Department of Industrial and Operations Engineering, Instituto Tecnológico Autónomo de México (ITAM), Mexico

Abstract: In this paper, we provide a tutorial to solve the problem of minimising the safety stock levels under guaranteed-service time over a supply chain (SC) using the dynamic programming (DP) algorithm proposed by Graves and Willems (2000a). We solve a small instance to exemplify the steps of the DP algorithm, then we solve two bigger instances by a Java-based application. As the DP algorithm has some insights that must be explained in detail to carry it out, the novelty and helpfulness of this tutorial lies in the fact that we account for those insights which lead researchers to develop new algorithms to solve bigger instances. This problem is included in some state-of-the-art SC books but none gives details about the solution algorithm as we do in this tutorial.

Keywords: supply chain management; SCM; safety stock levels; guaranteed service time; dynamic programming; industrial logistics; tutorial.

DOI: 10.1504/IJISE.2016.080286

International Journal of Industrial and Systems Engineering, 2016 Vol.24 No.4, pp.490 - 509

Received: 10 Mar 2014
Accepted: 15 Nov 2014
Published online: 11 Nov 2016 *

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