Dynamic inventory optimization for a serial supply chain with stochastic and lead-time sensitive demand

Abstract

Abstract This paper investigates the problem of inventory level optimization in a two-echelon supply chain over a multi-period planning horizon with stochastic and lead time-sensitive demand. The problem consists in quoting the best service time to end customers and locating inventories along the supply chain to satisfy this service time. The shorter the service time is, the greater the demand becomes. We model the problem and propose an analytical solving approach. We finally provide some illustrative examples.