Optimizing the base stock levels in a multi-echelon multi-item inventory/production system

An inventory optimization is performed in a multi-echelon multi-item production environment for Nedap. By means of simulation model, the production process is simulated on a tactical level. The simulation model is used to evaluate the base stock levels which are derived from multiple models suggested in the literature. In addition, an optimization model is created which used the metaheuristic simulated annealing, in order to determine the optimize the base stock levels. This optimization model is able to provide better performances in terms of both service level and average inventory. This has been achieved by using the multiple echelon levels and placing the right amount on each individual item. Furthermore, by performing a sensitivity analysis insights were gained into the effect of different parameters on the objective value.