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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

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