A supply network model with base-stock control and service requirements

We develop a supply network model that takes as input the bill of materials , the (nominal) lead times, the demand and cost data, and the required cust omer service levels. In return, the model generates the base-stock level at each store-the stocking location for a part or an end-product, so as to mi nimize the overall inventory capital throughout the network and to guarante e the customer service requirements. The key ingredient of the model is a d etailed, albeit approximate, analysis of the actual lead times at each stor e and the associated demand over such lead times, along with a characteriza tion of the operation at each store via an inventory-queue model. The gradi ents are derived in explicit forms, and a conjugate gradient routine is use d to search for the optimal solution. Several numerical examples are presen ted to validate the model and to illustrate its various features.