Improvement of Inventory Replenishment Decisions

This work considers a setting in which external distributors of animal pharmaceutical companies lack transparency with the companies and/or have poor data keeping standards, resulting in unexpected stockouts situations and various other issues, putting lives at stake. The objective of this work is to find a simple but effective approach to improve distributors' replenishment decisions which can yield yearly replenishment plans detailed to the month. The company would then offer its distributors to improve their operations in exchange for better and more timely data, a by-product being that the production requirements are known in advance. Lot-sizing heuristics are a choice category of techniques due to their simplicity and to their relation to production planning concepts. Using simulation, it was found that the least unit cost (LUC) and Silver-Meal heuristics perform best across all product types tested. The periodic order quantity rule can also be used for more stable solutions in terms of ordering frequency without too much loss in performance. Compared to historical ordering patterns, cost savings to the extent of 30% or more are possible through the use of those heuristics.