Extending inventory supply chain planning to a multi-warehouse and multi-period context: A mathematical programming approach focused on a continuous review policy

Abstract

Inventory management has been widely studied by several authors. Nevertheless, there is still a small number of studies exploring its application at the supply chain level, despite being widely recognized that the collaboration between partners in the supply chain is critical to achieve more efficient inventory management decisions. In fact, such a collaboration fosters the global optimization of supply chains. In this paper, the inventory supply chain planning problem is addressed through the use of the continuous review (r,Q) policy, aiming at optimizing inventories throughout a supply chain while defining the amount of products transported among facilities over time. A mixed integer linear programming (MILP) model is built for that purpose and a multi-periodic/multiwarehouse/multi-retailer supply chain is considered as reference. This model adds to existing supply chain inventory management literature by extending existing models to a multi-periodic and multi-warehouse supply chain. The model, hereafter called CRP2InvSC model, allows to determine inventory levels, order quantities Q and reorder points r for each time period and each facility on a supply chain. Products flows between supply chain entities is also modelled. A case study based on a distribution supply chain is used to illustrate the applicability of the proposed model.