Genetic Algorithm Based Inventory Optimization Analysis in Supply Chain Management

Inventory management is one of the significant fields in supply chain management. Efficient and effective management of inventory throughout the supply chain significantly improves the ultimate service provided to the customer. Hence there is a necessity of determining the inventory to be held at different stages in a supply chain so that the total supply chain cost is minimized. Minimizing the total supply chain cost is meant for minimizing holding and shortage cost in the entire supply chain. This inspiration of minimizing Total Supply Chain Cost could be done only by optimizing the base stock level at each member of the supply chain. The dilemma occurring here is that the excess stock level and shortage level is very dynamic for every period. In this paper, we have developed a novel and efficient approach using Genetic Algorithm which clearly determines the most possible excess stock level and shortage level that is needed for inventory optimization in the supply chain so as to minimize the total supply chain cost.