The classical GSM is designed to cope with a bounded demand only. In this project, among other approaches, the Guaranteed Service Model (GSM) is developped further. Since in large networks, the curse of dimensionality prohibits an exact numerical solution of MDP models, other means have been developed. The states are typically represented by the inventory levels and pipeline stocks, occasionally plus additional information to formally make the model Markov (i.e., independent of the historical development).
The formalization of inventory problems is classically based on Markov Decisions Problems (MDP). Konrad Schade (Volkswagen AG, Baunatal), and Christopher Grob (Volkswagen AG, Baunatal). Lefeber (TU Eindhoven, The Netherlands), Dr. A.G. de Kok (TU Eindhoven, The Netherlands), Dr. Jörg Rambau) cooperates in this project with Prof. In order to be able to compare various approaches and to judge the practical implications, the Lehrstuhl Wirtschaftsmathematik (Prof. Multi-Echelon Inventory Optimization seeks to find coordinated replenishment policies in an inventory network that yield a satisfying balance between capital investment in inventories, service qualitiy for the customer, and operational costs like production, transport, or emergency measures. The result is the famous bull-whip effect, i.e., the demand variablility increases drastically from end customer stock points all the way up to the top central warehouses. Classically, each stock point would optimize its safety stock and reorder points individually. A prominent way of organizing replenishment orders is by the specification of safety stocks (the inventory level up to which we replenish) and reorder points (the inventory level at which an order is triggered).
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One important aspect of Supply Chain Management is how to distribute stock in a network of inventories.
Project description: APPLICATION BACKGROUND Christopher Grob, Beiersdorf AG, Hamburg.MEIO – Multi-Echelon Inventory Optimization JMM-Compare – Comparison of Joint-Market Models.DISPO – A Decision Support System for the Integrated Size and Price Optimization.
Model Predictive Control for Smart Grids.Reputation and Trust in Multiagent Systems.