A Powerful and Efficient Algorithm for Analysis and Optimization the Inventory Problem

Abstract

Inventory management is considered as one of the most important factor in Supply Chain Management. However, the real-world inventory systems are complexly intertwined with related elements, it is recognized that identify the determining factor that influences the change of inventory is a complex problem. In this paper, we proposed a simulation-based combination algorithm for optimizing inventory systems. The objective is to minimize the inventory quantities while reducing opportunity loss. The inventory system is modeled and simulated, which returns the performance functions. The expectations of these functions are then estimated by an algorithm and optimal combination result is obtained. Based on the sensitivity analysis, the determining factor that influences the change of inventory is identified. The results show that proposed algorithm is powerful and effective.