Economic and environmental comparison of grouping strategies in coordinated multi-item inventory systems

Abstract

The increasing concerns for sustainability throughout supply chains are enforcing managers to plan their operations considering not only economic but also environmental performance. Inventory management is one of the main determinants of the costs incurred and emissions generated throughout supply chains as it defines the level of logistical operations, freight transportation, and warehousing activities. In this study, we analyze a multi-item inventory control system with coordinated shipments. In particular, we revisit the well-known deterministic joint replenishment problem (JRP) with economic and environmental objectives under indirect and direct grouping strategies. We formulate and develop solution methods for each bi-objective JRP and compare direct and indirect grouping strategies with respect to their economic as well as environmental performance. A set of numerical studies is presented to examine the settings where a specific grouping strategy can be economically and environmentally better than the other.