MATEC Web Conf.
Volume 68, 20162016 The 3rd International Conference on Industrial Engineering and Applications (ICIEA 2016)
|Number of page(s)||5|
|Section||Industrial Production and Management|
|Published online||01 August 2016|
Stochastic Dynamic Programming for Three-Echelon Inventory System of Limited Shelf Life Products
Arab Academy for Science, Technology, and Maritime Transport, Industrial and Management Engineering Department, 1029 Alexandria, Egypt
Coordination of inventory decisions within the supply chain is one of the major determinants of its competitiveness in the global market. Products with limited shelf life impose additional challenges in managing the inventory across the supply chain because of the additional wastage costs incurred in case of being stored beyond product’s useful life. This paper presents a stochastic dynamic programming model for inventory replenishment in a serial multi-echelon distribution supply chain. The model considers uncertain stationary discrete demand at the retailer and zero lead time. The objective is to minimize expected total costs across the supply chain echelons, while maintaining a preset service level. The results illustrate that a cost saving of around 17% is achievable due to coordinating inventory decisions across the supply chain.
© The Authors, published by EDP Sciences, 2016
This is an Open Access article distributed under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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