Abstract:

In today's competitive world, companies should minimize cost while providing high quality goods. Companies generally try to reduce the level of inventory to minimize the cost and therefore they usually observe shortage in practice. At this point, using of the right inventory control policy is the most effective and efficient way to reduce shortage. In inventory control policies, the basic question is to specify the size and the timing of a replenishment order in supply chain members. Over the years, many advanced methods have been applied to answer these questions. Due to the difficulty of dealing with the uncertainties in supply chain environment, simulation optimization (SO) is used in this study to get the application of goals in supply chain. Although SO requires a great deal of understanding related with inventory control system, the use of SO brings such complex system within the grasp of managers. In this paper, SO is used to analyze the supplier selection and inventory control system simultaneously. The system results clearly reveals that the best values of inventory control variables and the most suitable suppliers can be determined by SO in a two echelon supply chain model with backorder.

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