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This paper addresses the use of discrete-event simulation and heuristic optimization to dynamically adjust the parameters within a continuous-review reorder point replenishment strategy. This dynamic adjustment helps to manage inventory and service levels in a simple supply chain environment with seasonal demand. A discrete-event simulation model of a capacitated supply chain is developed and a procedure to dynamically adjust the replenishment parameters based on re-optimization during different parts of the seasonal demand cycle is explained. The simulation logic and optimization procedure are described. Further, analysis of the impact on inventory is performed.
Date of Conference: 5-8 Dec. 2010