Simulation and optimization of multi-echelon inventory control and coordination in supply chain based on Arena

This paper addresses the optimization problem of the coordination of the multi-echelon inventories for the supply chain which is composed of a supplier with unlimited inventory, two manufacturers and a distributor and in which the demands involve not only the determined order but also random demands. All of the manufacturers and the distributor apply the hybrid policy (T, s, S) to manage their inventories of the products and raw materials. Firstly, the mathematical model is proposed to describe the optimization problem of the coordination of the multi-echelon inventories of the supply chain, which determines the safe inventories and maximum inventories of the each node to minimize the average inventory management cost of the system per unit time and the lead time of the order demand, maximize satisfaction rate of the customer demand. Then the simulation based optimization method, which is composed of the simulation model of the multi-echelon inventory system and the GA based optimization algorithm, is employed to solve the problem. The simulation software Arena is employed to design and implement the simulation model of the system and optimization algorithm. Finally, the simulated data cases are computed to verify the effectiveness of the method proposed in this paper.