Search Results (78)

Global supply chains often face uncertainties in production lead times, fluctuating exchange rates, and varying tariff regulations, all of which can significantly impact total profit. To address these challenges, this study formulates a multi-country supply chain problem as a Semi-Markov Decision Process (SMDP), integrating both currency variability and tariff levels. Using a Q-learning-based method (SMART), we explore three scenarios: (1) wide currency gaps under a uniform tariff, (2) narrowed currency gaps encouraging more local sourcing, and (3) distinct tariff structures that highlight how varying duties can reshape global fulfillment decisions. Beyond these baselines we analyze uncertainty-extended variants and targeted sensitivities (quantity discounts, tariff escalation, and the joint influence of inventory holding costs and tariff costs). Simulation results, accompanied by policy heatmaps and performance metrics, illustrate how small or large shifts in exchange rates and tariffs can alter sourcing strategies, transportation modes, and inventory management. A Deep Q-Network (DQN) is also applied to validate the Q-learning policy, demonstrating alignment with a more advanced neural model for moderate-scale problems. These findings underscore the adaptability of reinforcement learning in guiding practitioners and policymakers, especially under rapidly changing trade environments where exchange rate volatility and incremental tariff changes demand robust, data-driven decision-making. Full article

This paper explores the optimization of the bullwhip effect (BWE) and inventory costs considering price information symmetry in an omnichannel environment, offering novel insights into managing supply chain dynamics. We examine the pick-up lead time in the “buy online and pick up in store” (BOPS) channel as a critical operational factor, analyzing how the interaction with the ordering lead time affects omnichannel supply chain performance. The research highlights the impacts of the BOPS strategy on demand and inventory information, developing a comparative examination of the BWE and inventory expenses within various supply chain contexts. We discover that the interplay between ordering lead time and pick-up lead time significantly affects both inventory costs and the BWE of omnichannel retailers, with these impacts presenting an inverse relationship. While numerous studies have validated that product returns can restrain the information distortion in supply chains, our findings reveal that this relationship holds true in omnichannel retail only within specific supply chain contexts. This comprehensive approach offers valuable insights for omnichannel supply chain managers seeking to optimize the BOPS strategy and improve overall operational efficiency. Full article

This study presents a reinforcement learning–based approach to optimize replenishment policies in the presence of uncertainty, with the objective of minimizing total costs, including inventory holding, shortage, and ordering costs. The focus is on single-level assembly systems, where both component delivery lead times and finished product demand are subject to randomness. The problem is formulated as a Markov decision process (MDP), in which an agent determines optimal order quantities for each component by accounting for stochastic lead times and demand variability. The Deep Q-Network (DQN) algorithm is adapted and employed to learn optimal replenishment policies over a fixed planning horizon. To enhance learning performance, we develop a tailored simulation environment that captures multi-component interactions, random lead times, and variable demand, along with a modular and realistic cost structure. The environment enables dynamic state transitions, lead time sampling, and flexible order reception modeling, providing a high-fidelity training ground for the agent. To further improve convergence and policy quality, we incorporate local search mechanisms and multiple action space discretizations per component. Simulation results show that the proposed method converges to stable ordering policies after approximately 100 episodes. The agent achieves an average service level of 96.93%, and stockout events are reduced by over 100% relative to early training phases. The system maintains component inventories within operationally feasible ranges, and cost components—holding, shortage, and ordering—are consistently minimized across 500 training episodes. These findings highlight the potential of deep reinforcement learning as a data-driven and adaptive approach to inventory management in complex and uncertain supply chains. Full article

This study investigates a stochastic production planning problem with regime-switching parameters, inspired by economic cycles impacting production and inventory costs. The model considers types of goods and employs a Markov chain to capture probabilistic regime transitions, coupled with a multidimensional Brownian motion representing stochastic demand dynamics. The production and inventory cost optimization problem is formulated as a quadratic cost functional, with the solution characterized by a regime-dependent system of elliptic partial differential equations (PDEs). Numerical solutions to the PDE system are computed using a monotone iteration algorithm, enabling quantitative analysis. Sensitivity analysis and model risk evaluation illustrate the effects of regime-dependent volatility, holding costs, and discount factors, revealing the conservative bias of regime-switching models when compared to static alternatives. Practical implications include optimizing production strategies under fluctuating economic conditions and exploring future extensions such as correlated Brownian dynamics, non-quadratic cost functions, and geometric inventory frameworks. In contrast to earlier studies that imposed static or overly simplified regime-switching assumptions, our work presents a fully integrated framework—combining optimal control theory, a regime-dependent system of elliptic PDEs, and comprehensive numerical and sensitivity analyses—to more accurately capture the complex stochastic dynamics of production planning and thereby deliver enhanced, actionable insights for modern manufacturing environments. Full article

Lot sizing and cutting stock problems are critical for manufacturing companies seeking to optimize resource utilization and minimize waste. This paper addresses the interconnected nature of these problems, often occurring sequentially in industries involving cut items or packaging. We propose a novel mixed integer linear programming (MILP) model that integrates the capacitated lot sizing problem with the one-dimensional cutting stock problem within a multi-level manufacturing framework. The cutting stock problem is addressed using an arc flow formulation. Our model aims to minimize setup, production, holding, and waste material costs while incorporating capacity constraints, setup requirements, inventory balance, and the use of various cutting machines. The effectiveness of our model is demonstrated through numerical experiments using a commercial optimization package. While the model efficiently generates optimal solutions for most scenarios, larger instances pose challenges within the specified time limits. Sensitivity analysis is conducted to evaluate the effect of changing essential parameters of the integrated problem on model performance and to provide managerial insights for real-life applications. Full article

This study addresses the multi-period, multi-item, single-stage capacitated lot sizing problem (CLSP) in a parallel machine environment with machine eligibility constraints under a make-to-order production policy. A mixed-integer linear programming (MILP) model is developed to minimize total operational costs, including production, overtime, extra shifts, inventory holding, and backorders. The make-to-order setting introduces additional complexity by requiring individualized customer orders, each with specific due dates and product combinations, to be scheduled under constrained capacity and setup requirements. The model’s performance is evaluated in the context of a real-world production planning problem faced by a manufacturer of cold-formed steel profiles. In this setting, parallel forming machines process galvanized sheets of cold-rolled steel into a variety of profiles. The MILP model is solved using open-source optimization tools, specifically the HiGHS solver. The results show that optimal solutions can be obtained within reasonable computational times. For more computationally demanding instances, a runtime limit of 300 s is shown to improve solution quality while maintaining efficiency. These findings confirm the viability and cost-effectiveness of free software for solving complex industrial scheduling problems. Moreover, experimental comparisons reveal that solution times and performance can be further improved by using commercial solvers such as CPLEX, highlighting the potential trade-off between cost and computational performance. Full article

Freight mode choice and the resulting inventory implications significantly influence a product’s carbon footprint. This paper investigates mode selection under a voluntary carbon emissions constraint. Slower modes such as inland waterways and ocean freight are less expensive and emit less greenhouse gas (GHG), but they require higher inventory levels due to longer lead times. In contrast, faster modes like less-than-truckload (LTL) shipping reduce inventory needs but incur higher transportation costs and emissions. Mode choice thus involves trade-offs between transport cost, inventory holding, lead time uncertainty, and GHG emissions from transportation and warehousing. This paper develops a comprehensive inventory-transportation model under the stochastic demand and lead time to evaluate these trade-offs and guide sustainable freight decisions. The model is a practical toolbox that enables managers to evaluate how freight mode choice and inventory policy affect costs and emissions under different operational scenarios and carbon constraints. Full article

Ensuring the profitability of retailers utilizing in-store inventory for online fulfillment is a pivotal issue in omnichannel retailing. This study examines the inventory allocation challenges faced by retailers when managing interactions between online and offline channels to identify strategies that maximize revenue. The findings enable retailers to address key operational conflicts while implementing omnichannel strategies. We develop an omnichannel newsvendor model, deriving an optimal strategy for retailer inventory level and online acceptance thresholds, demonstrating the economic superiority of this approach over traditional policy. Furthermore, this paper further explores how carry-over inventory influences strategic decisions, particularly in quantifying the trade-off between the cancellation cost and the inventory holding cost. The results reveal that cancellation costs incentivize retailers to increase safety stock and reduce online acceptance thresholds, with strategy sensitivity intensifying as offline demand dispersion grows. Compared to the traditional policy, our policy demonstrates superior performance when the cancellation cost remains below a critical value, though its effectiveness decreases under high offline demand dispersion. Moreover, dynamic strategy adjustments must balance the cancellation cost against the holding cost in the carry-over scenario. The proposed framework systematically integrates inventory allocation with demand admission control, addressing a critical gap in existing literature that has failed to comprehensively link these two operational levers. This dual-focused perspective significantly advances omnichannel inventory management theory. Full article

In the context of globalized and complex supply chains, supply uncertainty occurs frequently. To reduce dependence on suppliers, retailers often consider holding strategic inventory and introducing private brands. To explore the relationship between private brands and strategic inventory strategies, and to determine the optimal strategic decisions, this paper constructs a two-stage supply chain model. Using game theory methods, we calculate the equilibrium outcomes of the supply chain under two scenarios: one with only national brands and the other with the introduction of private brands. The main findings are as follows. First, we identify the optimal decisions for both suppliers and retailers in each scenario. The influencing factors include perceived quality, inventory costs, and supply stability. Second, we find that there are constraints for retailers to activate strategic inventory, but these constraints are less restrictive when private brands are introduced. Finally, introducing private brands benefits retailers in implementing strategic inventory, although the extent of this impact depends on the conditions under which the strategic stockpile is implemented. These findings fill the gap in the existing literature on the impact of private brand introductions on strategic inventory under supply uncertainty and highlight valuable implications for business decision-makers. Full article

We study a multi-product production and inventory planning problem with uncertain demand in the cold rolling stage of steel production processes. The problem is to determine the production amount of each product in each planning period so that the sum of production, inventory holding, and backorder costs is minimized. We first formulate it into a Markov decision process (MDP) model, considering dynamic demand. Aiming at the proposed large-scale MDP model, we develop the improved Approximated Dynamic Programming (ADP) algorithms, which are composed of the reformulation and the approximation functions for the value function in MDP. Linear and two quadratic approximate functions are proposed to approximate the value function. Numerical experiments show the optimal gaps of the different approximation methods and illustrate the efficiency of the proposed ADP methods. Full article

This paper investigates the impact of artificial intelligence (AI) on the forklift industry, focusing on logistics and procurement within small and medium-sized enterprises (SMEs) in Romania. Using a mixed-methods approach, including interviews with seven managers from a benchmarked company in the forklift industry (BCFI) and quantitative analysis of operational data, we examine the transformative effects of AI integration. Key findings include a 30% reduction in inventory holding costs due to AI-powered predictive analytics; a 15% decrease in procurement costs through AI-driven supplier evaluation systems; a 25% increase in operational efficiency from AI-optimized route planning; a 40% boost in overall productivity attributed to AI-enabled automation; and a projected 20% reduction in low-skilled labor requirements over the next five years. The study employs environmental, social, and corporate governance (ESG), balanced scorecard (BSC), benchmarking, and activity-based management (ABM) models to analyze risks and implications of AI integration. A case study of a leading Romanian SME in the forklift industry is presented, examining financial strategies using McKinsey’s 7S framework. The paper concludes that while AI offers significant operational benefits, it also presents challenges in workforce transition and ethical considerations that require careful management. Full article

This research employs numerical simulations and scenario analysis to assess a supply chain model’s economic and environmental performance operating under stochastic market demand, with inventory levels managed by a periodic review (R, s, S) inventory system. The inventory model in this research is designed to determine the minimal inventory levels required to achieve predefined fill rates across various operational constraints. The supply chain’s inventory model simulates optimal responses to normally distributed market demand within 365-day periods characterized by mean and two levels of demand variability through two fill rate levels, two workweek schedules, 15 review periods, and 16 lead times. By conducting an extensive analysis of the 192000 simulation experiments of the supply chain under periodic review (R, s, S) inventory system, complex influences between system variables and economic outcomes of supply chain operation measured by ordering, transportation, holding, penalty, and total costs along with greenhouse gas emissions arising from inventory-related transportation according to the ISO 14083 standard are analyzed. The insights from this research have significant practical implications, providing valuable guidance for supply chain managers, researchers, and freight companies offering guidance for improving economic and environmental performance. Full article

The capacitated multi-item lot-sizing problem, referred to as the CLSP, is to determine the lot sizes of products in each period in a given planning horizon of finite periods, meeting the product demands and resource limits in each period, and to minimize the total cost, consisting of the production, inventory holding, and setup costs. CLSPs are often encountered in industry production settings and they are considered NP-hard. In this paper, we propose a Lagrange relaxation (LR) approach for their solution. This approach relaxes the capacity constraints to the objective function and thus decomposes the CLSP into several uncapacitated single-item problems, each of which can be easily solved by dynamic programming. Feasible solutions are achieved by solving the resulting transportation problems and a fixup heuristic. The Lagrange multipliers in the relaxed problem are updated by using subgradient optimization. The experimental results show that the LR approach explores high-quality solutions and has better applicability compared with other commonly used solution approaches in the literature. Full article

Efficient inventory management, including optimal safety-stock levels, is crucial for operational continuity and cost-effectiveness in various industries. This study seeks the optimal inventory management strategy to minimize costs and determine ideal safety-stock levels. It compares five approaches: the company’s (STAR) current “number of days” method, two alternative models from the literature (the theory of constraints (TOC) replenishment model and the service-level approach), and two newly developed hybrid methodologies (the TOC replenishment model with ABC–XYZ classification and the service-level approach with ABC–XYZ classification). The analysis focused on financial performance, considering inventory holding and shortage costs. Monthly production plans were established and fixed as constant based on predetermined optimum month-end inventory levels derived from each method. Through simulation, actual month-end inventory levels were assessed, comparing total inventory costs (TICs). While unit holding costs (UHCs) were documented in financial records in the company, unit shortage costs (USCs) were not; thus, USCs were examined in three scenarios. The results show that the second proposed hybrid model consistently outperformed the other four methods, including the company’s current approach, significantly reducing TIC. The analysis emphasizes the importance of demand variation in setting safety stocks and demonstrates the second hybrid methodology’s effectiveness in optimizing safety-stock strategies and improving overall inventory management efficiency. Full article

Perishable products are very common, but managing inventory of perishable products can be very challenging for firms, especially in distribution systems, including multiple chain stores. In this environment, we consider a dynamic lot-sizing problem faced by a distribution center that dis-patches a single perishable product to multiple chain stores. Demand cannot be backlogged, but it does not have to be satisfied; unsatisfied demand means stockout (lost sale). The first step is to transform the total profit function into a special total cost function. Our next step is to explore the properties of the optimal solution and use them to formulate a dynamic programming algorithm to solve the problem. Furthermore, we establish forecast and decision horizon results, which help the operation manager to decide the precise forecast horizon in a rolling decision-making process. Based on the model setting and the methods of dynamic programming, we obtained two interesting findings: (1) the maximized profit objective function is equivalent to the minimized cost objective function, and (2) the famous zero inventory property conditionally holds in the inventory management of perishable products. On an extensive test bed, useful insights were obtained on the impact of the lifetime of the product and cost parameters on the total cost and length of the forecast horizon. Thus, the contributions of this study are as follows: (1) we explore two structure policies in an optimal solution to devise efficient algorithms to reduce computational complexity; (2) we provide a sufficient condition for forecasting and decision horizons; and (3) we determine that, for a given fixed cost, the median forecast horizon first increases with the lifetime of the product and stockout cost and then remains invariable when it reaches a certain level. Full article