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A Simulation Study on a Variant Policy of Inventory Replenishment for the Order Consolidation : A Case of Steel Industry  

Jung Jae-Heon (포스코 경영연구소)
Publication Information
Journal of the Korean Operations Research and Management Science Society / v.31, no.2, 2006 , pp. 99-112 More about this Journal
Abstract
In our model, we keep inventory to satisfy uncertain demands which arrives irregularly. In this situation, we have additional two constraints. First, we need to have certain amount of order consolidation (consolidation constraint) for the orders to replenish the inventory because of production or purchase amount constraint. And also, if we order at a certain date which was set by administrative convenience, we have capacity constraint to order the consolidated order demands (capacity constraint). We show this variant inventory policy is needed in steel industry and note that there will be possible similar case in industry. To deal with this case, we invent a variant replenishment policy and show this policy is superior to other possible polices in the consolidation constraint case by extensive simulation. And we derive a combined solution method for dealing with the capacity constraints in addition to the consolidation constraints. For this, we suggest a combined solution method of integer programming and simulation.
Keywords
Simulation; Integer Programming; Inventory Policy; Supply Chain Management; Steel Industry; Service level;
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