A profit-maximization dynamic model for supply chain planning

Supply chain planning is a strategic issue for every company because of the evolution of its technical and economic environment. Many disciplines such as operations research, management science, automatic control, information science, industrial engineering, etc., contribute to the development and improvement of various planning methods: synchronization, flexibility, forecasting, multi-stage planning, dynamic and stochastic aspects, lot sizing etc. Literature relating to supply chain planning mostly focuses on cost minimization, and the theoretical approach in this field usually follows the concepts introduced by the economic order quantity model (EOQ) of Harris-Wilson. However, despite the quasi-systematic resort to sophisticated mathematical models, the strategy of cost minimization is not always useful in the real industrial context. Several studies and papers showed the limits of these models. This paper deals with dynamic optimisation of the quantity to order in a supply chain for several products. The model takes into account the demand process, economic characteristics and logistic constraints, in order to determine the quantity which will maximize profits and satisfy customer requirements without compromising the profitability of the company.