Supply chain network design with coordinated inventory control

In this paper, we present models and solution methods for supply chain network design that not only integrate the location-transportation and inventory problems, but also consider the implementation of coordinated inventory control in the network. We compare two different strategies differentiated by whether or not coordinated inventory control is implemented. Due to the complexity of the optimization problems, we develop heuristic methods to solve the problems generated by the two strategies. The numerical results show the benefits of considering coordinated inventory control by reducing the inventory as well as the total costs in the supply chain network. The structure of the network can also be affected by the coordinated inventory control. The effects are most pronounced when the inventory holding cost rate is high.

Automated summary

This paper presents models and solution methods for supply chain network design that integrate location-transportation and inventory problems, with a focus on coordinated inventory control. Two different strategies are compared, with heuristic methods developed to solve the optimization problems. The numerical results demonstrate the benefits of coordinated inventory control, particularly in reducing total costs and inventory, and its impact on network structure, especially when inventory holding cost rate is high.