Optimization of vendor-managed inventory systems in a rolling horizon framework

Optimization of vendor-managed inventory systems in a rolling horizon framework

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Article ID: iaor20091284
Country: Netherlands
Volume: 54
Issue: 4
Start Page Number: 1019
End Page Number: 1047
Publication Date: May 2008
Journal: Computers & Industrial Engineering
Authors: , ,
Keywords: vehicle routing & scheduling, inventory
Abstract:

This paper aims at designing a dynamic VMI system. In this system, the entire supply chain performance is optimized in terms of production planning at vendor's site, distribution strategy, and inventory management at manufacturer's site. We also explore some of the complications involved in setting up such a system. The VMI system is modeled as a mixed-integer linear program (MILP) using discrete-time representation. The mathematical representation follows the resource-task network (RTN) formulation. To address the complexity of the problem, different optimization-based solution algorithms are proposed and compared in terms of solution quality and CPU time.

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