Three-Leveled Model For Integrate Inventory Management in Supply Chains

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MAGAZINE  №2 (97) April 2020


CATEGORY  Inventory management Optimization and mathematical modelling Supply chain management



 In the theory of inventory management, various models of inventory management are widely known. All of them are based on two fundamental factors: order size and the time between two adjacent deliveries. The variety of additional conditions (discounts depending on the size of the delivery lot, penalties due to deficits, the volume of safety stock, etc.) make the task of developing a working model to minimize total costs extremely difficult. It is another factor that looks interesting - the multi-level structure of reserves allocation.
In (Aslakhanov A.R., 2017; Lukinskiy V.V., Aslakhanov A.R., 2017), an integrated inventory management model was developed that would take into account deficit costs, randomness of demand and logistics cycles duration, as well as a predetermined planned level of end-user service. The model was developed for cases of two-level supply chains, which is a serious limitation for applying the model in practice.
In this paper, the model will be expanded for the case of a three-level linear supply chains in order to assess the scalability potential of the developed model for business situations and to assess the possibility of using the developed model in conjunction with reinforcement learning methods.

 Electronic version

 Keywords:  inventory management Economic order quantity safety stock supply chain management total logistics costs

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