A joint economic lot-size model for an integrated supply network using genetic algorithm

Competitive environment calls for cost reduction in tree-like inventory systems. One of the key elements to cost reduction of a supply chain is integration of inventory system. In this paper, we consider an integrated four-stage supply chain system, incorporating one supplier, multiple producers, multiple distributors multiple retailers. The aim of this model is to determine order quantity of each stage (from its upstream) and shortage level of each stage (for its downstream) such that the total cost of the supply chain to be minimized. Thus, for three possible situations of relation between supplier and producers replenishment intervals, an integrated inventory model, making joint economic lot-size of shortage, holding, ordering and setup costs in all stages is developed. Then a heuristic approach based on genetic algorithm for solving this problem is presented.