Optimal Model and Genetic Algorithm of Two-Echelon Inventory System with Correlated Demands

Two-echelon inventory system includes a center depot (CD) and many sub depots (SD). There is little literature studying on the correlated demand which is the fundamental relationship between the CD and the SD. According to the idea of maximum part-period gain (MPG) in the operation management, the system optimal inventory strategy can be obtained through the trade-off between the order cost and the storage cost. Then the optimal model and the genetic algorithm are given. And the simulation result showed that it is a good way to get the satisfied order policy.