A FRAMEWORK FOR EVALUATING AND COMPARING INVENTORY CONTROL POLICIES IN SUPPLY CHAINS

Supply chains, always, face increased uncertainty in demand. For that reason, inventory control presents a critical issue of supply chain management. Controlling inventories with proper policies can enhance customer service levels, smooth production plans, and reduce operation costs. In this paper, a framework is suggested for evaluating and comparing different types of inventory control policies. Four distinct inventory control policies are discussed and modeled. Different types of measures are used to evaluate the performance of the supply chains which implement these inventory control policies; performance measures used are; fill rate, as an example of desired measures (to be increased), and inventory level, as an example of undesired measures (to be decreased). A framework for evaluating and comparing the overall performance of the inventory policy is developed and applied. A discrete event simulation with ARENA simulation package is used for developing a simplified supply chain model consists of two echelons, with one supplier that prepares and supplies raw materials to a production/inventory system, which has two different inventories, one for supplied raw materials, and the other for finished products. A numerical example is provided to illustrate the applicability of the developed framework. The applied numerical example clarified the ability of the evaluation framework to deal with different types of inventory control policies, and different practice scenarios.