Abstract

Inventory management and service network design can have a long term profitability affect for an organization. Previous studies have focused on minimizing supply chain costs or maximizing service levels when determining how to service customers. When focusing on minimizing costs, organizations tend to reduce inventory levels, resulting in stock-outs. Alternatively, when organizations focus on maximizing service levels, they tend to overstock inventory, which drives up costs. However, in both scenarios, the customer's desirability for the product and where it is located is ignored. In many cases, the customer does not necessarily need the product immediately and is willing to either wait or travel a further distance to purchase the item. The optimization model presented in this paper will focus on maximizing the customer’s desirability while mitigating supply chain costs. This model was compared to a base model which focused on minimizing supply chain costs. The results were then compared and organized into an extensive review.