Multi-objective continuous review inventory policy using MOPSO and TOPSIS methods

Abstract

In the dynamic business environment of today, decision-making involves considering various conflicting aspects. Inventory planning problems aim to determine how much and when to order products to satisfy customer demand at the lowest possible cost while maintaining a desirable service level. These problems can be formulated as a MOPSO algorithm, which is used to handle multiple objectives in a continuous review stochastic inventory control system (r, Q). Unfortunately, most multi-objective inventory models have been solved by aggregating objectives using specific weights or by optimizing only one objective and treating the others as constraints. Considering the complexity of real-world inventory control problems, which involves conflicting objectives such as minimizing cost and maximizing service level, the need arises to employ more precise optimizers that can generate better and more diverse non-dominated solutions of reorder point and order size system. In this paper multi-criteria decision-making framework that combines MOPSO algorithm and TOPSIS method to generate a Pareto front of non-dominated solutions and rank them based on decision makers' preferences. Initially, the original MOPSO is applied to the multi-objective inventory control problem, and then the mutation operator is integrated into the MOPSO to maintain diversity in the swarm and explore the entire search space. Next, the leader selection strategy called the geographically-based system (Grids) is replaced by the crowding distance factor to choose the global optimal particle as a leader. Additionally, the ε-dominance concept is employed to limit the archive size and maintain more diversity and convergence in the MOPSO for optimizing the inventory control problem. In conclusion, this work not only pioneers a cutting-edge approach to multi objective inventory control but also underscores its practical value. By facilitating the generation of superior solutions that cater to diverse decision-maker preferences, our methodology resonates deeply with real-world challenges and sets a new benchmark for effective inventory planning.