A Multiobjective Optimization Method For Strategic: Sourcing and Inventory Replenishment
A Multiobjective Optimization Method For Strategic: Sourcing and Inventory Replenishment
A Multiobjective Optimization Method For Strategic: Sourcing and Inventory Replenishment
MACS1 Project
INRIA (The French National Institutefor Research in Computer Science and Conlrol)
ISGMP Bat. A, Ile du Soulcy, Met2 57000, FRANCE
{ding & lyes.benyoucef & xie}@loria.fr
simulation-based multiobjective optimization
method is proposed in this paper for joint decision-making on
strategic sourcing and ioventory replenishment. More specifically,
a multiobjective genetic algorithm is developed to determine the
optimal supplier portfolio and inventory control parameters in
order to reach best compromise of two conflicting criteria: costs
and demand fill-rate. Discretwvent simulation is used to pronde
faithful evaluation of these two criteria. Numerical results on a
variant of a real case study are presented.
Abshoef-A
Keywords-ultiobjecdve
genetic olgorithm; simulofion;
supplier selection; inventory replenishment;
I.
INTRODUCTION
Supply chain design and management usually involve
multiple conflicting optimization objectives, such as low costs,
high quality, short leadtime and high demand fill-rate.
Traditionally, the total cost of all supply chain activities is used
as the key performance indicator (KPI) for supply chain
optimization.However, in the current competition environment,
it is not always desirable to reduce costs if this results in
degraded customer service level. Trade-off between these
conflictingperformance indicators should he made by decision
makers. Among numerous supply chain related problems,
strategic sourcing and inventory replenishment are two
research areas of significant practical impact. A large number
of research works can he found in the literature respectively
[1]-[8]. However, few of proposed techniques and methods
deal with the two problems at the same time. One of the
difficulties is the fact that strategic sourcing, principally
supplier selection, is a decision at the strategic level, while
inventory replenishment issues are rather at the operational
level. Strategic decisions have long-term impacts on overall
performances, which should be made in a comprehensive
manner. On the contrary, inventory replenishment emphasizes
short-term facets, which should respect to the dynamic feature
of demand. Existing optimization approaches for supplier
selection are mainlv based on deterministic mathematical
.impact
- of scategic decisions on operational decisions ani do
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11.
L(x)<L(x*)
(3)
Tx
..
feasible
-ion
'
"..
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nI. A MULTIOBJEC~VE
OPTIMIZATION
METHOD
The proposed method is composed of two modules: an
optimizer and a simulator. The optimization module is
developed using a simple GA [IO] with extensions for
multiobjective ranking, fitness sharing and Pareto-set filtering.
A simulation model generator is developed to produce discreteevent simuhtiou models automatically, regarding to various
solutions suggested by the optimizer. Both modules are
implemented using an objected-oriented language Ct+ to
achieve the modeling flexibility and computation efficiency. A
more detailed explanation of the two modules is given in
subsequent sections.
The flow diagram of the proposed method is shown in Fig.
3. For each individual in the present population, the optimizer
proposes a set of possible values for decision variables, more
specifically supplier poryblio, order assignmeni weight and
inventory control parameters. Then a primitive feasibility
check is performed before further steps. The repair procedure
repairs the supplier portfolio by adding more suppliers, if
current suppliers cannot provide all what the final customer
needs. With the verified set of parameters, the simulation
model generator creates a discrete-event simulator accordingly.
AAer simulation runs,the estimations of cosis and
..
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II
. . .
Binary A b i e s
(supplier selection)
. . .
-4
integer Variables
integer variable
(assignment weights) (replenishment)
(4)
w. EXPENMENTAL
RESULTS
A variant of a real case study is presented in this section to
demonstrate how the proposed method can be applied to solve
realistic problems.
A. Method CusfomizationondAssumptions
We consider a supply chain composed of eight suppliers,
one distribution center (DC) and one customer. During the
simulation, the customer generates daily demands. The demand
quantity follows normal distribution witb a mean of 300 and a
variance of 50. All demands are collected by the distribution
center. The customer is defined as impatient, i.e. hackorder is
not allowed. A demand is considered as lost if there is no stock
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SUPPLIER CHARACTERISTICS
B. Numerical Results
Considering that customer service level is critical for most
practitioners, we focus on the analysis of solutions that keep
the demand fill-rate at a high level. Fig. 5 shows the
distribution of the best-so-far Pareto kont for solutions with a
demand fill-rate higher than 80%. These 49 points are evenly
distrihuted along the curve.
For further analysis, we select 5 solutions, which have the
highest demand fill-rates. Table 11 summaries the
corresponding supplier portfolio, order assignment ratio
(calculated by weight) and inventory replenishment parameters.
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80%
10
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12
13
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17
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TABLE II.
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Amwl
SOLUTIONS
I7
I8
19
ua coe (q
V.
CONCLUSIONS
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