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The development of a simulation-based approach to optimise the inventory policy in a single-echelon supply chain: a case study

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  • A. Mahamani
  • K. Prahlada Rao
  • V. Pandurangadu
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    Abstract

    Inventory control is one way to increase profit margins without altering resources. A spreadsheet model was developed for the inventory control of packaging material in a real case study from a fruit juice manufacturing firm. The contribution of this paper is the construction of a spreadsheet model that incorporates a dynamic re-order point policy logic; using the result from the spreadsheet-based approach and analytical approximation method, a best alternate ordering policy for a single-echelon supply chain can be developed by the statistical analysis of the dynamic re-order point, static re-order point and existing ordering policies and the flexibility of the optimal ordering policy was evaluated using a randomly generated demand. The objective of this work is to develop the best ordering policy with a low total inventory cost to ensure a better service efficiency level across a single-echelon supply chain. The reduction in the total inventory costs obtained from the spreadsheet-based approach is compared with the analytical approximation method. This paper provides a basic understanding with respect to the development of an ordering policy for a single-echelon supply chain.

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    Bibliographic Info

    Article provided by Inderscience Enterprises Ltd in its journal Int. J. of Data Analysis Techniques and Strategies.

    Volume (Year): 1 (2008)
    Issue (Month): 2 ()
    Pages: 173-192

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    Handle: RePEc:ids:injdan:v:1:y:2008:i:2:p:173-192

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    Web page: http://www.inderscience.com/browse/index.php?journalID=282

    Related research

    Keywords: simulation; inventory control; dynamic re-order point policy; analytical approximation method; inventory performance measures; inventory policy; single-echelon supply chains; packaging materials; fruit juice manufacturing; spreadsheets; ordering policy.;

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    Cited by:
    1. Sari Viskari & Anita Ruokola & Miia Pirttilä & Timo Kärri, 2012. "Advanced model for working capital management: bridging theory and practice," International Journal of Applied Management Science, Inderscience Enterprises Ltd, vol. 4(1), pages 1-17.

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