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An Approach to Real Multi-tier Inventory Strategy and Optimization

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Author(s): Ying Liu

Journal: Research Journal of Applied Sciences, Engineering and Technology
ISSN 2040-7459

Volume: 6;
Issue: 7;
Start page: 1178;
Date: 2013;
Original page

Keywords: Lead time | multi-tier inventory | service level | safety stock | uncertainties

ABSTRACT
Multi-tier goods inventory strategy and optimization in large enterprises are hard nuts to crack. Thus goods distribution network often either carry excess total inventory, or lower customer service level due to improper goods safety stock in the network. Two typical approaches for managing multi-tier inventory and their pitfalls are examined in this study. Based on the review, real multi-tier inventory strategy and optimization tools are presented with a simulation result to reflect the impact of multi-tier strategy on the network inventory optimization. The result shows that uncertainties in supplier delivery lead-time and/or demand variations will be the two most important factors with non-linear impact.
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