Simulation-based optimisation of multi-echelon inventory systems

Multi-location inventory models are one of the most widely investigated fields in mathematical inventory theory, but the analytically tractable models suffer from various restrictive assumptions. To overcome these restrictions simulation can be used. However, simulation is not an optimisation approach. Therefore, we propose the simulation optimisation approach where a simulator is combined with an appropriate optimisation tool. In the present paper, we show that simulation optimisation successfully can be applied to define optimal policies in very general multi-echelon inventory systems. A numerical example shows the usability of our approach. (C) 2004 Elsevier B.V. All rights reserved.