A simulation optimization approach for a two-echelon inventory system with service level constraints

Shing-Chih Tsai, Ya Xin Zheng

Research output: Contribution to journalArticle

21 Citations (Scopus)

Abstract

In this paper, we present a simulation optimization algorithm for solving the two-echelon constrained inventory problem. The goal is to determine the optimal setting of stocking levels to minimize the total inventory investment costs while satisfying the expected response time targets for each field depot. The proposed algorithm is more adaptive than ordinary optimization algorithms, and can be applied to any multi-item multi-echelon inventory system, where the cost structure and service level function resemble what we assume. Empirical studies are performed to compare the efficiency of the proposed algorithms with other existing simulation algorithms.

Original languageEnglish
Pages (from-to)364-374
Number of pages11
JournalEuropean Journal of Operational Research
Volume229
Issue number2
DOIs
Publication statusPublished - 2013 Sep 1

All Science Journal Classification (ASJC) codes

  • Computer Science(all)
  • Modelling and Simulation
  • Management Science and Operations Research
  • Information Systems and Management

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