Multi-echelon multi-item dynamic inventory management via decomposition and coordination algorithm

This paper considers a multi-echelon multi-item dynamic inventory problem with deterministic, time-varying demand. Since in some cases in practice it´s inappropriate to use (R, Q) policy or (s, S) policy, a mixed 0-1 linear programming model is established. By relaxing the coupled transportation capacity constraints, individual sub-problems for each material are obtained and sub-gradient method is introduced to coordinate these sub-problems. In order to obtain feasible solution, a heuristic repair approach is proposed, then approximate optimal solutions of primary problem are obtained. Numerical experiments have been carried out to validate the effectiveness of this algorithm and show that this method could give tighter upper bound and lower bound than LP relaxation.