Suitable inventory level for multiple products sharing limited warehouse space

The inventory cost optimization model is studied in this paper. The base-stock policy or the order-up-to policy is determined using a simulation to imitate an inventory system under periodic review. A combination of Python code and an Excelspreadsheet is used to simulate the space sharing of two products, reducing the computational burden. The Cyclic Coordinate Search method (CCS) is implemented to find the optimal values of the inventory target level for each product when limited space is shared in a distribution center. As space is limited, an external warehouse is rented to store excessive inventory. In cases where demands are not satisfied, they are considered lost sales. After placing a replenishment order, the supplier delivers within varied lead times. Based on the simulation results, it is evident that space sharing is more beneficial compared to other cost optimization cases demonstrated in this paper.Using real demand data enhances the reliability of the simulation results.