A tutorial to set safety stock under guaranteed-service time by dynamic programming

Code

• github.com/JustinNeumann/multi-echelon-inventory-optimisation
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Abstract

In this paper, we provide a tutorial to solve the problem of minimising the safety stock levels under guaranteed-service time over a supply chain (SC) using the dynamic programming (DP) algorithm proposed by Graves and Willems (2000a). We solve a small instance to exemplify the steps of the DP algorithm, then we solve two bigger instances by a Java-based application. As the DP algorithm has some insights that must be explained in detail to carry it out, the novelty and helpfulness of this tutorial lies in the fact that we account for those insights which lead researchers to develop new algorithms to solve bigger instances. This problem is included in some state-of-the-art SC books but none gives details about the solution algorithm as we do in this tutorial.

Reproductions