An Optimal Supply Policy for Multi-product Multi-retailer Using Simulated Annealing Method

Hsian-Jong Hsiau, Chun-Wei R.Lin


We consider a multi-product multi-retailer supply and inventory system. The total costs which include inventory cost and transport cost belong to the supplier. The transport cost consists of a major carrier cost and a minor delivery cost for each product. The total costs saving can be achieved by coordinating the supply of a group of products. Applying for each individual product a cyclic supply and inventory policy, where the delivery cycle time is a multiple of basic cycle time, can reduce the total costs. A modified simulated annealing method (MSA) to determine the optimal supply policy is proposed in this paper. A numerical example presents that the MSA is feasible. Experiment results show that the MSA algorithm significantly outperforms other solution methods in the quality of the solution as well as in the running time.

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