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A simulation–optimization approach for a service-constrained multi-echelon distribution network

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  • Noordhoek, Marije
  • Dullaert, Wout
  • Lai, David S.W.
  • de Leeuw, Sander

Abstract

Academic research on (s,S) inventory policies for multi-echelon distribution networks with deterministic lead times, backordering, and fill rate constraints is limited. Inspired by a real-life Dutch food retail case we develop a simulation-optimization approach to optimize (s,S) inventory policies in such a setting. We compare the performance of a Nested Bisection Search (NBS) and a novel Scatter Search (SS) metaheuristic using 1280 instances from literature and we derive managerial implications from a real-life case. Results show that the SS outperforms the NBS on solution quality. Additionally, supply chain costs can be saved by allowing lower fill rates at upstream echelons.

Suggested Citation

  • Noordhoek, Marije & Dullaert, Wout & Lai, David S.W. & de Leeuw, Sander, 2018. "A simulation–optimization approach for a service-constrained multi-echelon distribution network," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 114(C), pages 292-311.
    • Handle: RePEc:eee:transe:v:114:y:2018:i:c:p:292-311
    DOI: 10.1016/j.tre.2018.02.006
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