Constrained Particle Swarm Optimization of Supply Chains

Since supply chains highly impact the financial performance of companies, it is important to optimize and analyze their Key Performance Indicators (KPI). The synergistic combination of Particle Swarm Optimization (PSO) and Monte Carlo simulation is applied to determine the optimal reorder point of warehouses in supply chains. The goal of the optimization is the minimization of the objective function calculated as the linear combination of holding and order costs. The required values of service levels of the warehouses represent non-linear constraints in the PSO. The results illustrate that the developed stochastic simulator and optimization tool is flexible enough to handle complex situations.

Authors:

• András Király
• Tamás Varga
• János Abonyi

Keywords:

• stochastic processes
• empirical distributions
• Monte Carlo simulation
• PSO
• supply chain management

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