Mixed-integer nonlinear model for multiproduct inventory systems with interior point and branch-and-bound method

Abstract

Inventory management can be considered as one of the main components of planning and production control. In the literature numerous mathematical models are presented for inventory management, which approach different aspects related to this management. The development of efficient inventory models and the adoption of appropriate optimization methods for solving these models are needed to support in making decisions to inventory management. In this paper, we propose an inventory model that works with multiple products and multiple resource constraints, deciding between the continuous review and periodic review systems. This model is formulated as a nonlinear mixed integer optimization problem. It explores for the resolution of this model, an approach based on Branch-and-Bound method and interior point method. In order to propose this model and choose the method for its resolution, initially an investigation in the literature review on the topic is done. Then, the concept of continuous review and periodic review systems is explored. Finally, two computational tests are proposed, one to compare the results of proposed nonlinear model with the linear model and the other to verify its efficiency and applicability. The results show the potential of the model and solution method used to work with inventory system.