THE OPTIMAL ROLE OF OPTIMAL INVENTORY IN SUPPLY CHAINS AND BUSINESS

Supply Chain Optimization Objective Function

Constraints Satisfy Supply Chain Service Policy Supply Chain Service Policy = Fill Rate > Target Response Time < Target

Minimize Total Supply Chain Costs Total Supply Chain Cost (TSCC) = Total Logistics Cost (TLC) + Total Inventory Cost (TIC) + Total Logistics Cost (TLC) = Total Transportation Cost (TTC) + Total Warehousing Cost (TWC) Total Inventory Cost (TIC) = Inventory Carrying Cost (ICC) + Lost Sales Cost (LSC)

On Time = Target Accuracy = Target

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