MULTI-ECHELON INVENTORY MANAGEMENT UNDER DELAY-ORDERING POLICY

Abstract

This thesis focuses on the inventory management of multi-echelon supply chains, using the delay-ordering policy. This allows the model to incorporates the dynamics of real time demands into the replenishment activities, moving beyond the traditional supply chain models that are mainly static in nature. The cost of serving each unit of demand is precisely calculated, while interdependent demands are permitted without underlying demand distribution assumptions. This resolves a critical design issue in the traditional multi-echelon supply chain problem, where the trade-off between underage and overage costs are not properly accounted for, although we are only able to do so in a simplified supply chain structure. In addition, an algorithm based on Mixed Integer Linear Programming (MILP) is proposed to solve the model in reasonable time. Besides, we also design an interactive tool, able to both optimize and visualize supply chain inventory management.