Solving four-echelon integrated inventory model using a heuristic approach

Supply chain management is the integration of logistics and information from the suppliers to the consumers where all members of the chain must work together for the benefit of the whole system. The objective of this study is to present a heuristic approach to solve a four-echelon integrated inventory model in order to minimize the total cost of the whole supply chain. We apply the heuristic approach to derive the global solution by means of branch-and-bound method. The numerical example demonstrates the proposed solution procedure and limitations of the proposed method. Finally, sensitive analysis is carried out to study the influence of different stocking strategies on the performance of the supply chain. This can provide some insight to the executives in the supply chain management decision.