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The core issue in achieving a focused approach for the improvement of supply chain distribution inventory management is the optimisation of the inventory level adopted by various supply chain entities. This paper presents an approach of optimising the inventory level for a two-echelon supply chain by considering the distribution costs and various production related costs in meeting the customer demand. This methodology is devised for a single product based on the assumption that the total demand of customers for all periods should be less than the limited production capacity and inventory level of plant and warehouse. The focus is to determine the optimal production rate and cost of the plant, the optimal inventory level of the plant and warehouse and the distribution costs for two-echelon in each period by optimising the entire supply chain using genetic algorithm based distribution inventory model (GADIM).
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