Title: Performance evaluation of inventory replenishment strategies in a capacitated supply chain under optimal parameter settings

Authors: Chandandeep S. Grewal, Paul Rogers, S.T. Enns

Addresses: Department of Mechanical and Manufacturing Engineering, Schulich School of Engineering, University of Calgary, 2500 University Drive, NW, Calgary, Alberta, T2N 1N4, Canada. ' Department of Mechanical and Manufacturing Engineering, Schulich School of Engineering, University of Calgary, 2500 University Drive, NW, Calgary, Alberta, T2N 1N4, Canada. ' Department of Mechanical and Manufacturing Engineering, Schulich School of Engineering, University of Calgary, 2500 University Drive, NW, Calgary, Alberta, T2N 1N4, Canada

Abstract: In this paper, the reorder point and Kanban replenishment strategies are compared and their performance is evaluated under the optimal decision variable settings for each strategy. A discrete-event simulation model of a simplified supply chain scenario is developed and simulation-based optimisation is used to find the optimal settings that minimise the average total inventory subject to a specified minimum customer service level. Changing the service level constraint allows results to be generated for multiple points along a performance trade-off curve. When such optimal trade-off curves are constructed for each replenishment strategy, these curves can be compared to evaluate relative performance over a range of service levels. Results show that the reorder point strategy dominates the Kanban strategy under optimal decision variable settings for the simplified supply chain being studied.

Keywords: discrete-event simulation; optimisation; inventory replenishment; reorder point; kanban; optimal trade-off curves; capacitated supply chains; supply chain performance; supply chain management; SCM; performance evaluation; service levels.

DOI: 10.1504/IJVCM.2010.033612

International Journal of Value Chain Management, 2010 Vol.4 No.3, pp.195 - 212

Published online: 08 Jun 2010 *

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