Stochastic Modeling of Supply Chain Management Systems
Logistics is that part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from the point-of-origin to the point-of-consumption in order to meet customers’ requirements. Supply Chain Management (SCM) is the practice of coordinating the flow of goods, services, information and finances as they move from raw materials to parts supplier to manufacturer to wholesaler to retailer to consumer. This chapter introduces the concept of Supply Chain Management System (SCMS). Two stochastic modeling problems are discussed in this chapter. Poisson demand process with (s,S) installation policy at retailer nodes are assumed to simplify the study . The system performance measures are computed with reference to specific cost structure. The total average annual variable cost is taken as optimization criterion. Numerical examples are provided to illustrate the problem.