Profit Maximizing Network Modeling With Inventory and Capacity Considerations

Abstract

Developing integrated strategic, tactical and operational manufacturing and distribution plans for the global supply chain of a large, international firm represents a formidable planning, as well as organizational undertaking. Moreover, to develop and execute plans that are not only integrated, but which maximize profits on a global basis presents a challenge of far greater magnitude. The use of advanced optimization modeling based analytics can generate keen insights for management decisions regarding sourcing, production, distribution, inventory and demand management on supply chain networks. This includes scenario and contingency planning analyses of complex strategic trade-offs such as the optimal balance between inventory levels and reserve manufacturing capacity on a network. In this chapter, we illustrate how optimization models can support a firm's planning efforts for these and related supply chain business decisions.