Modeling and Simulation of a Hierarchical, Distributed, Dynamic Inventory Management Scheme

Abstract

This paper proposes a Hierarchical, Distributed, Dynamic, Inventory management (HDDI) scheme. HDDI introduces the concept of emergency replenishment, wherein a retail unit is permitted to request the transfer of items from another retail unit in the neighborhood when, despite an outstanding reorder request from the warehouse, the demand continues to rapidly deplete the inventory level and the latter falls below an emergency threshold value. To be effective, with today's rapid price changes and fast-paced consumer demand, the cost function in HDDI is dynamic, i.e., reevaluated with current system parameters whenever the inventory level falls below the threshold. For fast results, the overall inventory management computation is distrubuted among all of the retail units. HDDI is modeled for a few representative inventory management networks, simulated on 17+ SUN workstations for stochastically generated demand functions and for different sets of values of the key parameters, and the performance results are reported.