Title: Modelling and optimisation of multiproduct, multi-echelon inventory problem

Authors: Debabrata Das; Moumita Tewary; Nirmal Baran Hui

Addresses: Asansol Engineering College, Vivekananda Sarani, Kanyapur, Asansol, West Bengal 713305, India ' National Institute of Technology, Durgapur, India ' National Institute of Technology, Durgapur, India

Abstract: The purpose of this paper is to determine the optimum lot-sizes and re-order intervals of a 3-echelon supply chain system. The mathematical model is built based on Roundy's PO2 policy and integer policy of ordering as a constrained non-linear programming problem. For illustration purpose, we took two problems of single and fifty products distribution systems under deterministic condition. Problems are solved with exhaustive search method on spreadsheet and through Matlab programming. Though PO2 policy is very simple and is able to provide a few solutions, and faster, many times it fails to find an optimal solution and sometimes, any feasible solution at all. On the contrary, integer policy gives many including optimum and all PO2 solutions. Result shows that our proposed model and the simple algorithm applied for the solution have superiority and is effective on reducing the total cost of the multi-product, multi-echelon inventory system. Further, the products are grouped based on reorder interval using joint replenishment strategy.

Keywords: multi-echelon; supply chain system; Roundy's PO2 policy; exhaustive search method; joint replenishment strategy.

DOI: 10.1504/IJSCIM.2017.10013464

International Journal of Supply Chain and Inventory Management, 2017 Vol.2 No.2, pp.122 - 142

Received: 21 Dec 2016
Accepted: 17 May 2017
Published online: 14 Jun 2018 *

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