Simulation-based evolution of resupply and routing policies in rich vendor-managed inventory scenarios

Vendor managed inventory combines inventory management and transportation. Compared to classical inventory management approaches, this strategy offers various degrees of freedom for the vendor while providing a certain service quality level for the customers. To capture the characteristics of rich real-world scenarios, our problem formulation consists of multiple customers, many products and stochastic product usages. Additionally, we also consider mixed formulations, where only a certain part of the customers is switched to a vendor managed inventory to allow a stepwise transition. We show that resupply and routing policies can be evolved autonomously for those scenarios using a simulation-based optimization approach. By combining inventory management and routing, the resulting policies aim to minimize costs and to maximize resource usage while maintaining a given service level. In order to validate our approach, we perform case studies and apply the evolved rules on a large-scale vendor managed inventory scenario for supermarkets. Furthermore, we show that our methodology can be used to perform a sensitivity analysis by considering the influence of exogenous and endogenous factors on the decision process, if a customer base should be transitioned to a vendor managed inventory.