An Optimization Model of Multi-echelon Stochastic Inventory System in the Supply Chain

Abstract

For a three-echelon stochastic inventory system in the supply chain, it is difficult to get optimal inventory control policies by analytical methods. The paper sets up an optimization model, which is built on the basis of the discrete event system simulation theory. The simulation-based optimization method is used to solve the problem by combining the simulation model and the particle swarm optimization algorithm together. The simulation sample not only demonstrates the feasibility and the effectiveness of the simulation-based optimization method by comparisons and analyses but also shows its applicability in the supply chain management.