Inventory Control in Supply Chains: A Comparative Analysis of Fundamental Approaches

The principal challenge in inventory control in supply chains consists of planning for a set of autonomous enterprises under information asymmetry and disparate, potentially conflicting objectives. In this paper, we investigate four different computational approaches to cope with this challenge: the decomposition, the integrated, the coordinated, and the bilevel programming approaches. Beyond their analytical characterization, we illustrate every approach on the same inventory control problem. For this purpose, we also developed a new coordination mechanism as well as a new model and solution algorithm for the bilevel optimization problem. Computational experiments are carried out on a set of randomly generated problem instances.