Business logistics, Inventory control -- Mathematical models, Delivery of goods--Management. Customer services -- Management, Mathematical optimization
A prime question in the management of supply chains is how to coordinate activities and inventories over a large number of locations, while also providing a competitive level of service to end customers. A key practice in this space is Multi-Echelon Inventory Optimization (MEIO) which in its most basic form aims to help us make decisions as to where and how much safety stock we should have in our supply chain based on service based constraints as well as location and time based constraints.
Safety stock allows us to deliver on short lead times (SLT) based on customer demand. Thus we are able to store minimal inventory at low costs at strategic places to where we are now able to offer a service level that helps us become much more competitive than before. In this paper we provide modeling and implementation guidance towards using MEIO as well as Safety Stock. We will provide the mathematical formulation as well as an implementation via excel spreadsheets.
Thorsvik, Andrew; Wease, Greg; Ha, Jejung; Burkhow, Joshua; and Narvekar, Kruti, "Multi-Echelon Inventory Optimization: Modeling and Implementation Guide" (2014). Engineering and Technology Management Student Projects. 287.