Research on Cost Optimization of Multi-Echelon Inventory System with Arena

This paper describes a simulation model of a multiechelon inventory cost optimization problem using Arena. The problem to minimize the total inventory cost throughout the system while satisfying end-customer service-level requirements is analyzed in detail by the simulation. There are three retailers, a distribution center and a manufacturer in the multi-echelon inventory system. Each member follows a continuous review (R, Q) policy. The results in this study suggest that the simulation method has more flexibility than traditional mathematical model for solving complex system in supply chain.