A MULTIPLE-ITEM MULTIPLE-CONSTRAINT INVENTORY OPTIMIZATION AND SUPPLIER SELECTION MODEL UNDER LEAD TIME DEMAND UNCERTAINTY
Open Access
Author:
Zhu, Rongjia
Graduate Program:
Industrial Engineering
Degree:
Master of Science
Document Type:
Master Thesis
Date of Defense:
None
Committee Members:
M Jeya Chandra, Thesis Advisor/Co-Advisor M Jeya Chandra, Thesis Advisor/Co-Advisor
Keywords:
supplier selection Inventory control uncertainty
Abstract:
The objective of this thesis is to solve a multiple-item, one-retailer inventory control and supplier selection problem with multiple constraints and uncertainties. For each item, only the best supplier will be selected using the multi-attribute utility theory. The potential loss due to lead time demand uncertainty is captured using the Taguchi loss function and is considered as one of the three attributes in supplier selection. The retailer faces stochastic demand and deterministic lead time for each item. Inventory review is guided by the continuous (r, Q) policy. Shortage is allowed in this model, and it is assumed that demands, which cannot be immediately fulfilled, are completely backordered. The objective is to minimize the expected total inventory cost, which consists of three terms: inventory holding cost, ordering cost, and shortage cost. The storage capacity constraint and purchasing budget constraint are considered in the model. Because of these constraints, there are interactions among multiple items. A heuristic solution method is provided to obtain the optimal values of the reorder point and order quantity for each item, such that the expected total inventory cost to the retailer is minimized and all constraints are satisfied.
