A heuristic for the inventory management of smart vending machine systems
Abstract: The purpose of this
paper is to propose a heuristic for the inventory management of smart vending
machine systems with product substitution under the replenishment point,
order-up-to level policy and to evaluate its performance.
Design/methodology/approach: The heuristic is developed on the basis of
the decoupled approach. An integer linear mathematical model is built to
determine the number of product storage compartments and replenishment
threshold for each smart vending machine in the system and the Clarke and
Wright’s savings algorithm is applied to route vehicles for inventory
replenishments of smart vending machines that share the same delivery days.
Computational experiments are conducted on several small-size test problems to
compare the proposed heuristic with the integrated optimization mathematical
model with respect to system profit. Furthermore, a sensitivity analysis is
carried out on a medium-size test problem to evaluate the effect of the
customer service level on system profit using a computer simulation.
Findings: The results show that the proposed heuristic yielded pretty
good solutions with 5.7% error rate on average compared to the optimal
solutions. The proposed heuristic took about 3 CPU minutes on average in the
test problems being consisted of 10 five-product smart vending machines. It was
confirmed that the system profit is significantly affected by the customer
service level.
Originality/value: The inventory management of smart vending machine
systems is newly treated. Product substitutions are explicitly considered in
the model. The proposed heuristic is effective as well as efficient. It can be
easily modified for application to various retail vending settings under a
vendor-managed inventory scheme with POS system.
Author: Yang-Byung Park,
Jun-Soo Yoo
Journal Code: jptindustrigg120030
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