A Real-Time Integrated Inventory and Transportation Management Method for Multi-echelon Supply Chains

Abstract

AbstractThis paper proposes a real-time operation method of integrated inventory and transportation management for multi-echelon supply chains. This method can significantly reduce the operating cost of multi-echelon supply chains by providing optimal operations considering not only suitable inventory management but also efficient transportation management. This method is established based on economic model predictive control (EMPC). The overall objective is to optimize the total operating cost including both inventory and transportation costs and meanwhile satisfy the customer demands along a given prediction horizon. The proposed EMPC method can be implemented online so that the optimal operations are obtained in real-time and applied to the supply chain. Finally, the effectiveness of the proposed real-time management method is provided with a case study of three-echelon supply chain.KeywordsReal-time management methodEconomic model predictive controlInventoryTransportationMulti-echelon supply chains