Centralized ordering and allocation policies in a two-echelon system with non-identical warehouses
✍ Scribed by rinivas Bollapragada; Ram Akella; Ramesh Srinivasan
- Publisher
- Elsevier Science
- Year
- 1998
- Tongue
- English
- Weight
- 496 KB
- Volume
- 106
- Category
- Article
- ISSN
- 0377-2217
No coin nor oath required. For personal study only.
✦ Synopsis
We consider a depot-warehouse distribution system in which demand occurs at the warehouse level. At the beginning of every period the depot places an order from an external supplier which arrives after a fixed lead time. The received order is then shipped to the warehouses. The depot itself does not hold any inventory. There are non-zero shipment lead times from the depot to the warehouses. Linear holding costs are incurred at the warehouses and unsatisfied demands are backlogged at a linear penalty cost. Our work is a generalization of earlier work by Eppen and Schrage, to allow for non-identical warehouses. We present a simple and easy-to-implement allocation policy and derive an explicit expression for the optimal order quantity under the inventory balance allocation assumption used earlier by other researchers. A computional study is presented to evaluate the accuracy of the proposed solution. ~) 1998 Elsevier Science B.V.