METAHEURISTICS FOR OPTIMIZING SAFETY STOCK IN MULTI STAGE INVENTORY SYSTEM
Managing the right level of inventory is critical in order to achieve the targeted level of customer service, but it also carries significant cost in supply chain. In majority of cases companies define safety stock on the most downstream level, i.e. the finished product level, using different analyt...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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Croatian Operational Research Society
2013-02-01
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| Series: | Croatian Operational Research Review |
| Subjects: | |
| Online Access: | http://hrcak.srce.hr/index.php?show=clanak&id_clanak_jezik=143324 |
| _version_ | 1811330967097311232 |
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| author | Gordan Badurina Kristina Šorić Zoran Babić |
| author_facet | Gordan Badurina Kristina Šorić Zoran Babić |
| author_sort | Gordan Badurina |
| collection | DOAJ |
| description | Managing the right level of inventory is critical in order to achieve the targeted level of customer service, but it also carries significant cost in supply chain. In majority of cases companies define safety stock on the most downstream level, i.e. the finished product level, using different analytical methods. Safety stock on upstream level, however, usually covers only those problems which companies face on that particular level (uncertainty of delivery, issues in production, etc.). This paper looks into optimizing safety stock in a pharmaceutical supply considering the three stages inventory system. The problem is defined as a single criterion mixed integer programming problem. The objective is to minimize the inventory cost while the service level is predetermined. In order to coordinate inventories at all echelons, the variable representing the so-called service time is introduced. Because of the problem dimensions, metaheuristics based on genetic algorithm and simulated annealing are constructed and compared, using real data from a Croatian pharmaceutical company. The computational results are presented evidencing improvements in minimizing inventory costs. |
| first_indexed | 2024-04-13T16:11:54Z |
| format | Article |
| id | doaj.art-561bc9c753d34686bca13e06d874f977 |
| institution | Directory Open Access Journal |
| issn | 1848-0225 1848-9931 |
| language | English |
| last_indexed | 2024-04-13T16:11:54Z |
| publishDate | 2013-02-01 |
| publisher | Croatian Operational Research Society |
| record_format | Article |
| series | Croatian Operational Research Review |
| spelling | doaj.art-561bc9c753d34686bca13e06d874f9772022-12-22T02:40:14ZengCroatian Operational Research SocietyCroatian Operational Research Review1848-02251848-99312013-02-01413443METAHEURISTICS FOR OPTIMIZING SAFETY STOCK IN MULTI STAGE INVENTORY SYSTEMGordan Badurina0Kristina Šorić1Zoran Babić2Alvogen, Zagreb, CroatiaZagreb School of Economics and Management, Zagreb, CroatiaFaculty of Economics Split, University of Split, Split, CroatiaManaging the right level of inventory is critical in order to achieve the targeted level of customer service, but it also carries significant cost in supply chain. In majority of cases companies define safety stock on the most downstream level, i.e. the finished product level, using different analytical methods. Safety stock on upstream level, however, usually covers only those problems which companies face on that particular level (uncertainty of delivery, issues in production, etc.). This paper looks into optimizing safety stock in a pharmaceutical supply considering the three stages inventory system. The problem is defined as a single criterion mixed integer programming problem. The objective is to minimize the inventory cost while the service level is predetermined. In order to coordinate inventories at all echelons, the variable representing the so-called service time is introduced. Because of the problem dimensions, metaheuristics based on genetic algorithm and simulated annealing are constructed and compared, using real data from a Croatian pharmaceutical company. The computational results are presented evidencing improvements in minimizing inventory costs.http://hrcak.srce.hr/index.php?show=clanak&id_clanak_jezik=143324Multi stage inventory systemInventory costService levelPharmaceutical industryMixed integer programmingMetaheuristics |
| spellingShingle | Gordan Badurina Kristina Šorić Zoran Babić METAHEURISTICS FOR OPTIMIZING SAFETY STOCK IN MULTI STAGE INVENTORY SYSTEM Croatian Operational Research Review Multi stage inventory system Inventory cost Service level Pharmaceutical industry Mixed integer programming Metaheuristics |
| title | METAHEURISTICS FOR OPTIMIZING SAFETY STOCK IN MULTI STAGE INVENTORY SYSTEM |
| title_full | METAHEURISTICS FOR OPTIMIZING SAFETY STOCK IN MULTI STAGE INVENTORY SYSTEM |
| title_fullStr | METAHEURISTICS FOR OPTIMIZING SAFETY STOCK IN MULTI STAGE INVENTORY SYSTEM |
| title_full_unstemmed | METAHEURISTICS FOR OPTIMIZING SAFETY STOCK IN MULTI STAGE INVENTORY SYSTEM |
| title_short | METAHEURISTICS FOR OPTIMIZING SAFETY STOCK IN MULTI STAGE INVENTORY SYSTEM |
| title_sort | metaheuristics for optimizing safety stock in multi stage inventory system |
| topic | Multi stage inventory system Inventory cost Service level Pharmaceutical industry Mixed integer programming Metaheuristics |
| url | http://hrcak.srce.hr/index.php?show=clanak&id_clanak_jezik=143324 |
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