Two-step Optimization for Product Availability in Inventory Management

Abstract

In retail, businesses need to decide what is the amount of inventory level that is available for various business operations, such as sales operations, fulfill operations. This product availability has significantly impact on many business objectives. Our method seeks to find an optimal product availability at both network level and item-location-channel level for omni-channel inventory management. We have developed a two-step optimization mechanism to forward the solution from higher level to the lower level so that the problem size is manageable, and the optimal product availability at different level are consistent, which also provides the benefit of decomposing a complex problem into many small subproblems that can be easily parallelized.