A simulation–optimization approach for a service-constrained multi-echelon distribution network

Marije Noordhoek; Wout Dullaert; David S.W. Lai; Sander de Leeuw

doi:10.1016/j.tre.2018.02.006

A simulation–optimization approach for a service-constrained multi-echelon distribution network

Marije Noordhoek, Wout Dullaert^*, David S.W. Lai, Sander de Leeuw

^*Corresponding author for this work

Amsterdam Business Research Institute

Research output: Contribution to Journal › Article › Academic › peer-review

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Abstract

Academic research on (s,S) inventory policies for multi-echelon distribution networks with deterministic lead times, backordering, and fill rate constraints is limited. Inspired by a real-life Dutch food retail case we develop a simulation-optimization approach to optimize (s,S) inventory policies in such a setting. We compare the performance of a Nested Bisection Search (NBS) and a novel Scatter Search (SS) metaheuristic using 1280 instances from literature and we derive managerial implications from a real-life case. Results show that the SS outperforms the NBS on solution quality. Additionally, supply chain costs can be saved by allowing lower fill rates at upstream echelons.

Original language	English
Pages (from-to)	292-311
Number of pages	20
Journal	Transportation Research. Part E, Logistics and Transportation Review
Volume	114
Early online date	9 May 2018
DOIs	https://doi.org/10.1016/j.tre.2018.02.006
Publication status	Published - Jun 2018

Funding

This work was partially supported by The Dutch Science Foundation (NWO) [438-13-202]. Appendix A

Keywords

Metaheuristics
Multi-echelon inventory
Scatter search
Service-constrained
Simulation-optimization
Supply chain performance

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10.1016/j.tre.2018.02.006

Noordhoek et al 2018Final published version, 598 KBLicence: Article 25fa Dutch Copyright Act
A simulationoptimization approach for a serviceconstrained multiechelon distribution networkFinal published version, 486 KBLicence: Article 25fa Dutch Copyright Act

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title = "A simulation–optimization approach for a service-constrained multi-echelon distribution network",

abstract = "Academic research on (s,S) inventory policies for multi-echelon distribution networks with deterministic lead times, backordering, and fill rate constraints is limited. Inspired by a real-life Dutch food retail case we develop a simulation-optimization approach to optimize (s,S) inventory policies in such a setting. We compare the performance of a Nested Bisection Search (NBS) and a novel Scatter Search (SS) metaheuristic using 1280 instances from literature and we derive managerial implications from a real-life case. Results show that the SS outperforms the NBS on solution quality. Additionally, supply chain costs can be saved by allowing lower fill rates at upstream echelons.",

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AU - Noordhoek, Marije

AU - Dullaert, Wout

AU - Lai, David S.W.

AU - de Leeuw, Sander

PY - 2018/6

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N2 - Academic research on (s,S) inventory policies for multi-echelon distribution networks with deterministic lead times, backordering, and fill rate constraints is limited. Inspired by a real-life Dutch food retail case we develop a simulation-optimization approach to optimize (s,S) inventory policies in such a setting. We compare the performance of a Nested Bisection Search (NBS) and a novel Scatter Search (SS) metaheuristic using 1280 instances from literature and we derive managerial implications from a real-life case. Results show that the SS outperforms the NBS on solution quality. Additionally, supply chain costs can be saved by allowing lower fill rates at upstream echelons.

AB - Academic research on (s,S) inventory policies for multi-echelon distribution networks with deterministic lead times, backordering, and fill rate constraints is limited. Inspired by a real-life Dutch food retail case we develop a simulation-optimization approach to optimize (s,S) inventory policies in such a setting. We compare the performance of a Nested Bisection Search (NBS) and a novel Scatter Search (SS) metaheuristic using 1280 instances from literature and we derive managerial implications from a real-life case. Results show that the SS outperforms the NBS on solution quality. Additionally, supply chain costs can be saved by allowing lower fill rates at upstream echelons.

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KW - Multi-echelon inventory

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A simulation–optimization approach for a service-constrained multi-echelon distribution network

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