2012
MAS 2012 Proceeding
A lot-size simulation model with batch demand with special attention towards the holding costs
Authors: Gerrit K. Janssens, Roongrat Pisuchpen, Patrick Beullens
Abstract
The problem deals with the optimization of a multi-echelon supply chain with, at the downstream end, the final customer with random demand but with a pre-determined service level. In such a chain with several levels including production and distribution, safety levels appear for various types of products. Decisions on safety stock are made based on various costs, including the holding cost. It is shown how this holding cost could be calculated and whether it should be based on purchase prices or selling price. In a stochastic scenario it is not so clear what the consequences are of using the wrong type of price. A simulation in Arena has been constructed to show an example of such a supply chain, under various levels of uncertainty and various types of demand distributions.
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