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Open AccessArticle

Simulation-Based Optimization of a Two-Echelon Continuous Review Inventory Model with Lot Size-Dependent Lead Time

1
Industrial Engineering Department, College of Engineering, King Saud University, Riyadh 11421, Saudi Arabia
2
Industrial & Manufacturing Systems Engineering, College of Engineering& IT, Taiz University, Taiz 6803, Yemen
*
Author to whom correspondence should be addressed.
Processes 2020, 8(9), 1014; https://doi.org/10.3390/pr8091014
Received: 26 July 2020 / Revised: 11 August 2020 / Accepted: 17 August 2020 / Published: 19 August 2020
(This article belongs to the Special Issue Optimization Algorithms Applied to Sustainable Production Processes)
This study analyzes a stochastic continuous review inventory system (Q,r) using a simulation-based optimization model. The lead time depends on lot size, unit production time, setup time, and a shop floor factor that represents moving, waiting, and lot size inspection times. A simulation-based model is proposed for optimizing order quantity (Q) and reorder point (r) that minimize the total inventory costs (holding, backlogging, and ordering costs) in a two-echelon supply chain, which consists of two identical retailers, a distributor, and a supplier. The simulation model is created with Arena software and validated using an analytical model. The model is interfaced with the OptQuest optimization tool, which is embedded in the Arena software, to search for the least cost lot sizes and reorder points. The proposed model is designed for general demand distributions that are too complex to be solved analytically. Hence, for the first time, the present study considers the stochastic inventory continuous review policy (Q,r) in a two-echelon supply chain system with lot size-dependent lead time L(Q). An experimental study is conducted, and results are provided to assess the developed model. Results show that the optimized Q and r for different distributions of daily demand are not the same even if the associated total inventory costs are close to each other. View Full-Text
Keywords: stochastic inventory problem; dependent lead time; simulation-based optimization; Arena stochastic inventory problem; dependent lead time; simulation-based optimization; Arena
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Alharkan, I.; Saleh, M.; Ghaleb, M.; Farhan, A.; Badwelan, A. Simulation-Based Optimization of a Two-Echelon Continuous Review Inventory Model with Lot Size-Dependent Lead Time. Processes 2020, 8, 1014.

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