Case Study: A monetary optimization through an analytical approach

November 24, 2025

This work proposes a comprehensive framework to optimize both tactical and daily cash logistics across a network of stores, aiming to improve operational efficiency and reduce capital immobilization. The approach tailors inventory management parameters to different store behaviors, acknowledging the heterogeneity of cash flow patterns across the network. At the tactical level, the framework uses historical demand and forecast data to simulate alternative combinations of inventory parameters, including review frequency, reorder points, recall thresholds, and service level targets. A cost-minimization heuristic selects the most effective configuration by balancing opportunity costs from cash immobilization with transportation costs, while respecting service level and transport capacity constraints. Delivery decisions are supported by a transport assignment algorithm that dynamically chooses the most efficient route and transport mode—manual or armored—based on capacity limitations. At the daily level, the system applies the tactically optimized parameters using the latest demand forecasts to compute replenishment and recall thresholds. These thresholds determine daily operational actions. After simulating inventory movements, a Mixed-Integer Linear Programming (MILP) model refines order quantities to ensure feasibility under transport constraints and to minimize costs, aligning day-to-day decisions with overall operational limits. Applied to real network data, the framework shows substantial reductions in excess inventory without compromising responsiveness during peak demand periods, such as monthly voucher distributions. The results also highlight that accumulating stores, which tend to concentrate cash, require inverted replenishment logic and specific calibration of recall thresholds to reflect their distinct behavior.

Authors in the community:

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  D

  Dinis Brito e Cunha Ventura

  ist196369

Supervisors of this institution:

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  T

  Tânia Rute Xavier de Matos Pinto Varela

  ist25305

other-engineering-and-technologies - Other engineering and technologies

eng - English

Instituto Superior Técnico