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A comprehensive survey of guaranteed-service models for multi-echelon inventory optimization

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  • Eruguz, Ayse Sena
  • Sahin, Evren
  • Jemai, Zied
  • Dallery, Yves

Abstract

Many real-world supply chains are multi-echelon systems consisting of several stages of procurement, manufacturing, and transportation. In such systems, it is not obvious how to allocate safety stocks to meet the target service levels at the lowest cost. The guaranteed-service model (GSM) is among the existing approaches that allow this problem to be addressed. Although the guaranteed-service model (GSM) was introduced more than 50 years ago, the last decade has witnessed a growing interest. The model extensions and the solution methods developed have expanded the applicability of the GSM. In this paper, we conduct a comprehensive review of the GSM literature. We classify the literature along three axes: (1) extensions of the original GSM through the relaxation of certain modeling assumptions, (2) solution methods developed for different supply chain structures, and (3) industrial applications and the results obtained on real-world problems. Finally, we discuss unsolved issues and suggest future research directions.

Suggested Citation

  • Eruguz, Ayse Sena & Sahin, Evren & Jemai, Zied & Dallery, Yves, 2016. "A comprehensive survey of guaranteed-service models for multi-echelon inventory optimization," International Journal of Production Economics, Elsevier, vol. 172(C), pages 110-125.
    • Handle: RePEc:eee:proeco:v:172:y:2016:i:c:p:110-125
    DOI: 10.1016/j.ijpe.2015.11.017
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    1. Aouam, Tarik & Kumar, Kunal, 2019. "On the effect of overtime and subcontracting on supply chain safety stocks," Omega, Elsevier, vol. 89(C), pages 1-20.
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    3. Achkar, Victoria G. & Brunaud, Braulio B. & Pérez, Héctor D. & Musa, Rami & Méndez, Carlos A. & Grossmann, Ignacio E., 2024. "Extensions to the guaranteed service model for industrial applications of multi-echelon inventory optimization," European Journal of Operational Research, Elsevier, vol. 313(1), pages 192-206.
    4. Gihan S. Edirisinghe & Thamer Almutairi, 2023. "Multi-Echelon Inventory Optimization for Practitioners: a Predictive Global Sensitivity Analysis Approach," SN Operations Research Forum, Springer, vol. 4(2), pages 1-20, June.
    5. Yazdani, Majid & Aouam, Tarik, 2023. "Shipment planning and safety stock placement in maritime supply chains with stochastic demand and transportation times," International Journal of Production Economics, Elsevier, vol. 263(C).
    6. Kumar, Kunal & Aouam, Tarik, 2019. "Extending the strategic safety stock placement model to consider tactical production smoothing," European Journal of Operational Research, Elsevier, vol. 279(2), pages 429-448.
    7. Bertazzi, Luca & Bosco, Adamo & Laganà, Demetrio, 2016. "Min–Max exact and heuristic policies for a two-echelon supply chain with inventory and transportation procurement decisions," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 93(C), pages 57-70.
    8. Klosterhalfen, Steffen T. & Willems, Sean P. & Dittmar, Daniel, 2023. "Safety stock placement in supply chains with expediting," European Journal of Operational Research, Elsevier, vol. 307(2), pages 745-757.
    9. Tookanlou, Parisa Bagheri & Wong, Hartanto, 2020. "Determining the optimal customization levels, lead times, and inventory positioning in vertical product differentiation," International Journal of Production Economics, Elsevier, vol. 221(C).
    10. Barros, Júlio & Cortez, Paulo & Carvalho, M. Sameiro, 2021. "A systematic literature review about dimensioning safety stock under uncertainties and risks in the procurement process," Operations Research Perspectives, Elsevier, vol. 8(C).
    11. Schuster Puga, Matías & Minner, Stefan & Tancrez, Jean-Sébastien, 2019. "Two-stage supply chain design with safety stock placement decisions," International Journal of Production Economics, Elsevier, vol. 209(C), pages 183-193.
    12. Fichtinger, Johannes & Chan, Claire (Wan-Chuan) & Yates, Nicola, 2019. "A joint network design and multi-echelon inventory optimisation approach for supply chain segmentation," International Journal of Production Economics, Elsevier, vol. 209(C), pages 103-111.
    13. Stephen C. Graves & Tor Schoenmeyr, 2016. "Strategic Safety-Stock Placement in Supply Chains with Capacity Constraints," Manufacturing & Service Operations Management, INFORMS, vol. 18(3), pages 445-460, July.
    14. Gonçalves, João N.C. & Sameiro Carvalho, M. & Cortez, Paulo, 2020. "Operations research models and methods for safety stock determination: A review," Operations Research Perspectives, Elsevier, vol. 7(C).

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