Title: Simulation-based optimisation for material dispatching in Vendor-Managed Inventory systems

Authors: Ganesh Subramaniam, Abhijit Gosavi

Addresses: American Solutions Inc., 100 Commerce Dr Suite # 103, Newark, DE 19713, USA. ' Simulation-Optimization Laboratory, Department of Industrial Engineering, State University of New York at Buffalo, 317 Bell Hall, Buffalo, NY 14260-2050, USA

Abstract: This paper examines a problem related to replenishing inventories at retailers in distribution networks operated under the paradigm of Vendor Managed Inventory (VMI). In the real world, complexity in analysing such systems arises out of numerous factors, including several random variables and a multitude of costs in the system. Much of the literature makes simplifying assumptions about these factors to develop tractable mathematical models. In this paper, we develop a simulation-optimisation approach that can accommodate most of these factors. In our experiments, our approach outperforms a heuristic used in a local industry and a heuristic developed from the newsvendor model.

Keywords: retailer networks; supply chain management; SCM; simulation; optimisation; vendor managed inventory; VMI; material dispatching; inventory replenishment.

DOI: 10.1504/IJSPM.2007.016314

International Journal of Simulation and Process Modelling, 2007 Vol.3 No.4, pp.238 - 245

Published online: 16 Dec 2007 *

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