To define service level in an integrated model for warehouse and inventory planning by utilizing heuristic solution: An example

The main objective of this study is to define service level equation with a different approach in the forward-reserve models. In this article within the forward-reserve model, in order to ensure service level optimization, a heuristic sequential solution procedure is proposed. A global model is presented and solved for evaluating and decision making of warehouse and inventory decisions. The proposed method is related to service level and inventory decisions as well as warehouse decisions and shortage cost. Two stages are followed with the proposed method. While in the first stage inventory decisions along with the constant service level decision being taken in the second part the results obtained in the first stage being kept constant and with this regard warehouse decisions being taken. Since the main purpose in this article is to develop a new equation for a service level, the results of the second stage are not shown in detail. It has been shown with an application of a real example that we could reach the solution in less time for the new developed service level equation comparing to simple service level search procedure. The main contribution of this study to literature is to develop a new service level equation for forward-reserve models.