An integrated robust replenishment/production/distribution policy under inventory inaccuracy

In this paper, a centralised production/distribution system is studied, in which the manufacturer controls the processes of raw material ordering, production and final goods distribution. The inventory records of raw materials, work-in-process, final goods in the manufacturer and the retailers are inaccurate. The objective of this research is to develop an integrated policy that can hedge against the negative impact of inventory inaccuracy at all stages of a supply chain. To achieve this aim, a backward recursive integrated robust policy is constructed. First, the time, quantity and vehicle route of the next distribution are forecasted by a distribution sub-policy; then the forecasted distribution time and quantity are used as the objective of the production process control, which is implemented by a production control sub-policy. Raw materials are ordered by a replenishment sub-policy according to the forecasted raw materials consumption in the production process. Numerical experiments are conducted to verify the feasibility and robustness of the proposed policy, which shows that besides of deploying radio frequency identification (RFID) devices in inventory management systems for raw materials, WIPs, final goods of the manufacturer and the retailers, integrated robust policies also can be employed to hedge against the impact of inventory inaccuracy.