Periodic review system for inventory replenishment control for a two-echelon logistics network under demand uncertainty: A two-stage stochastic programing approach

Research output: Contribution to journalArticleScientificpeer-review

Researchers

Research units

  • RMIT University
  • Pontificia Universidade Catolica do Rio de Janeiro
  • National Laboratory for Scientific Computing

Abstract

Here, we propose a novel methodology for replenishment and control systems for inventories of two-echelon logistics networks using a two-stage stochastic programming, considering periodic review and uncertain demands. In addition, to achieve better customer services, we introduce a variable rationing rule to address quantities of the item in short. The devised models are reformulated into their deterministic equivalent, resulting in nonlinear mixed-integer programming models, which are then approximately linearized. To dealwith the uncertain nature of the item demand levels, we apply a Monte Carlo simulationbased method to generate finite and discrete sets of scenarios. Moreover, the proposed approach does not require restricted assumptions to the behavior of the probabilistic phenomena, as does several existing methods in the literature. Numerical experiments with the proposed approach for randomly generated instances of the problem show results with errors around 1%.

Details

Original languageEnglish
Pages (from-to)247-276
Number of pages30
JournalPesquisa Operacional
Volume37
Issue number2
Publication statusPublished - 1 May 2017
MoE publication typeA1 Journal article-refereed

    Research areas

  • Replenishment and control systems, Shortage rationing rules, Stochastic programming, Two-echelon logistics networks

ID: 16007451