A Deep Reinforcement Learning Approach for Optimizing Inventory Management in the Agri-Food Supply Chain

Abstract

This research aims to improve inventory management throughout the agri-food supply chain, through the use of Deep Reinforcement Learning algorithms. Three Deep Reinforcement Learning algorithms, including Deep Q-Networks, Deep Deterministic Policy Gradient, and Proximal Policy Optimization algorithms were implemented and tested in order to evaluate their ability to actively manage inventories and improve the performance of supply chains. The results of the experimental phase offered important information regarding the performance of each Deep Reinforcement Learning algorithm. The Deep Deterministic Policy Gradient algorithm was identified as a viable choice, offering the best results in terms of accuracy to set the optimal inventories for the supply chain and improving the efficiency of the supply chain. The percentage of cost efficiency improved from 92.5% to 95.8% in the case of the DDPG model. The inventory turnover was also improved, surpassing the level of 8.1 units from the original level of 7.3 units which means that the system converts the inventor into sales in less time. The metric for on-time delivery also beneficiated from several improvements, reaching 96.5% form the level of 93.2% return. The quality metrics also registered a significant improvement and reported level of 96.2% after the implementation of the DDPG algorithm and compared to the level of 94.6% prior to the implementation of the algorithm. These results suggest that using such a system will bring beneficial changes to the supply chain and will offer the possibility of implementing a data-driven inventory system based on Deep Reinforcement Learning.