5Inventory Management

5.1. Introduction

One of the challenging problems in the SC is inventory management, which requires data from the three main entities of the SC, namely suppliers, retailers and customers. It starts from a deep study of customers’ demands in order to expect the appropriate ordered quantities while taking into account the quantities in stock. Hence, we can sum up the inventory management to be a master problem that can be handled in terms of the ordering, the warehousing and the delivery costs. In fact, the inventory problem within the SC plays a critical role because it strongly affects the supply chain performances. [LEE 92] considered the inventory control as the only tool to protect supply chain stability, robustness and efficiency in the sense that the computation of all ordered element is online with the stored quantities, customers’ demands and the delivery cost. Regarding all such components, the inventory problem positively affects the supply chain sustainability. Based on such concepts, the objective of supply chain inventory management is to satisfy the ultimate customer’ s demand while increasing the quality and service level and decreasing the total costs. The inventory management system at each supply chain entity (e.g supplier, firm and customer) has to respond to three different questions:

  1. – how often to review the stock status;
  2. – when to order new stock;
  3. – how much stock to be ordered.

The remainder of this chapter is organized as follows. ...

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