Supply Chain Management: Multi-Echelon Inventory Optimization
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Date
2007
Journal Title
Journal ISSN
Volume Title
Publisher
Suleyman Demirel University
Abstract
Effective management of inventory is essential for ensuring smooth operations in manufacturing, distribution, and retail enterprises. Multi-echelon supply chains, which include several interconnected storage and distribution stages such as regional distribution centers and local warehouses, require more complex coordination than single-echelon systems. Traditional approaches often treat each level independently, resulting in excess safety stocks, unreliable demand forecasting, and inconsistent service levels. These issues contribute to the bullwhip effect, where slight changes in customer demand lead to amplified variations across the supply chain. A true multi-echelon inventory optimization approach integrates the management of all echelons simultaneously. It focuses on minimizing total inventory while ensuring target service levels, improving visibility across the demand chain, accounting for lead time variability, and synchronizing replenishment decisions. By adopting such a coordinated strategy, enterprises can achieve reduced working capital, improved customer satisfaction, and better supplier performance across the entire network.
Description
Keywords
inventory, supply chain, multi-echelon, warehouse, optimization, demand, logistics
Citation
Bahitcan Eshenkulov, Tolkynbek Nurgaliyev / Supply Chain Management: Multi-Echelon Inventory Optimization / Suleyman Demirel University / Сду хабаршысы, 2007