Optimization of warehousing and transportation costs, in a multi-product multi-level supply chain system, under a stochastic demand

Abstract

The centralized management approach provides a general view to set a better coordination between the ele- ments of the supply chain, and look for the equilibrium between the stock and the shipped quantities. This paper describes a stochastic model predictive control algorithm to optimize the warehousing cost and the shipping cost on the same time. We consider a multi-level and multi-product supply chain dealing with a stochastic demand. We solve the stochastic model predictive control problem by a dynamic programming to determine the optimal policies to minimize the costs of shipping and warehousing products.