Title: A bi-level inventory replenishment strategy using clustering genetic algorithm

Authors: Ming-Chang Lee; Hui-Ming Wee; Simon Wu; C. Edward Wang; Rih-Lung Chung

Addresses: Department of Information Management, Yu Da University of Science and Technology, No. 168, Hsueh-fu Road, Tanwen Village, Chaochiao Township, Miaoli County 36143, Taiwan ' Department of Industrial and Systems Engineering, Chung Yuan Christian University, No. 200, Chung Pei Road, Chung Li District, Taoyuan City, 32023, Taiwan ' Department of Industrial and Systems Engineering, Chung Yuan Christian University, No. 200, Chung Pei Road, Chung Li District, Taoyuan City, 32023, Taiwan ' Department of Business Administration, National Taipei University, No. 151, University Road, San Shia District, New Taipei City, 23741, Taiwan ' Department of Electronic Engineering, Chung Yuan Christian University, No. 200, Chung Pei Road, Chung Li District, Taoyuan City, 32023, Taiwan

Abstract: Even though bi-level strategy has many real life applications, it has not received very much attention in the inventory management literature. A typical bi-level strategy is when an enterprise has to react to a more powerful decision-making agency (a dominant leader) such as the government. In this paper, we formulate and solve a single vendor-buyer inventory replenishment problem using a bi-level programming technique. The two scenarios considered are: 1) the supplier as a dominant leader; 2) the buyer as a dominant leader. A bi-level clustering genetic algorithm is utilised to solve the problem. We implement a numerical experiment using the data from a reference with integrated replenishment policy model and compared the performance of our model and the reference model. The computational results show that the net profit of the vendor and buyer under the bi-level strategy is higher than that under the integrated replenishment policy. We also show that the performance between the bi-level strategy and the integrated replenishment policy is sensitive to the purchasing cost and the market price. [Received 15 April 2012; Revised 20 June 2013; Revised 31 January 2014; Revised 26 July 2014; Accepted 27 October 2014]

Keywords: bi-level programming; clustering algorithms; genetic algorithms; vendor-buyer inventory replenishment; inventory management; modelling; purchasing cost; market price.

DOI: 10.1504/EJIE.2015.074381

European Journal of Industrial Engineering, 2015 Vol.9 No.6, pp.774 - 793

Available online: 25 Jan 2016 *

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