A demand-responsive two-echelon assembly inventory management model for a sustainable port terminal with coal mining sites

Nowadays, coal port terminals face considerable challenges such as limited storage capacity, multiple coal brands, uncertain prices and fluctuating demand rates. In this study, a two-echelon assembly inventory model is proposed to reduce inventory costs and improve sustainability of a port terminal together with coal mining sites under complex real-world constraints. In such a two-echelon assembly structure, replenishment information from a port terminal guides several mining sites to determine their inventory levels and production targets. To solve this inventory model, we develop an improved Wagner-Whitin (W-W) algorithm to optimize demand-responsive ordering decisions and support smart port operations by incorporating several factors such as coal grade control and carbon emission costs. Computational results validate that the proposed two-echelon inventory provides new insights on how lower carbon prices can quantitatively lead to increased production, which in turn affects inventory levels at a port terminal and mining sites. This study advances the theoretical foundation of multi-echelon inventory management and provides practical suggestions to enhance sustainability of coal port terminals.