Rolling Planning Method for Logistic System for Controlling Inventory and Stock-out Under Unsteady Demand

Abstract

Abstract In this paper, rolling planning method for logistics system is proposed for minimizing logistics cost, controlling inventory, and stock out parts due to unsteady demand for a particular planning period. Demand variability is the main challenge for any supply chain network. One strategy to tackle this challenge is to practice a make-to-order supply system. However, there is a risk to have delays on the supply, when the final customers generate the order because the product requires a specific production time and a lead time to arrive from the factory to the customer. For handling unsteady demand, the main problem is the generation of stock-out products or in opposite case, the generation of dead stock due to a large number of storage products. For solving these problems, rolling planning method is proposed. The aim of this method is to estimate the optimal production, delivery quantities and to hold satisfied inventory level for minimizing stock out parts over the planning period. The proposed model and solution approaches are implemented in a numerical example. The solution has shown that the proposed rolling planning model for logistics system handle unsteady demand successfully for controlling inventory and stock out parts over the given planning period.