Title: Supply chain management under product demand and lead time uncertainty

Authors: Joaquim Jorge Vicente; Susana Relvas; Ana Paula Barbosa-Póvoa

Addresses: CEG-IST – Centre for Management Studies, Instituto Superior Técnico, Universidade de Lisboa, Avenida Rovisco Pais, 1049-001 Lisboa, Portugal ' CEG-IST – Centre for Management Studies, Instituto Superior Técnico, Universidade de Lisboa, Avenida Rovisco Pais, 1049-001 Lisboa, Portugal ' CEG-IST – Centre for Management Studies, Instituto Superior Técnico, Universidade de Lisboa, Avenida Rovisco Pais, 1049-001 Lisboa, Portugal

Abstract: This paper considers a multi-echelon inventory/distribution system formed by N-warehouses and M-retailers that manages a set of diverse products within a dynamic environment. Retailers are replenished from regional warehouses and these are supplied by a central distribution entity. Transshipment at both regional warehouses and retailers levels is allowed. A mixed integer linear programming model is developed, where product demand at the retailers is assumed to be unknown. The problem consists of determining the optimal reorder policy by defining the new concept of robust retailer order, which minimises the overall system cost, including ordering, holding in stock and in transit, transportation, transshipping and lost sales costs while guaranteeing service level. The proposed model is extended to address simultaneously uncertainty in both products demands and replenishment lead times. A case study based on a real retailer distribution chain is solved.

Keywords: distribution; inventory planning; uncertainty; scenario planning approach; mixed integer linear programming; MILP.

DOI: 10.1504/IJOR.2020.105763

International Journal of Operational Research, 2020 Vol.37 No.4, pp.453 - 478

Received: 19 Jul 2016
Accepted: 17 Apr 2017
Published online: 13 Mar 2020 *

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