Determining Optimal Stock Level in Multi-Echelon Supply Chains

Abstract

Inventory control of Multi-echelon supply chains is a widely researched area. In most cases researchers choose analytic methods to analyze such logistics systems. Simulation is a very useful alternative for analyzing supply chain systems and a well-constructed model can provide a better approach and can give more realistic picture of the complex situation. In this article the authors introduce an interactive, configurable simulator to analyze stock levels in a complex supply chain. This new modeling approach (SIMWARE) is capable to simulate complex multi-echelon supply chains where the frequency of stock transfer between the individual levels of the supply chain can be optimized. The authors evaluate different optimization strategies and methods. The introduced SIMWARE method can be used to minimize the environmental impact of the supply chain by minimizing the transportation between the nodes of the supply chain hierarchy. The model provides an optimization methodology where the objective function is the total cost of the supply chain.