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Multi-echelon inventory control: an adjusted normal demand model for implementation in practice
Lund University. (Supply Chain Studies)
Lund University.
2014 (English)In: International Journal of Production Research, ISSN 0020-7543, E-ISSN 1366-588X, Vol. 52, no 11, p. 3331-3347Article in journal (Refereed) Published
Abstract [en]

This paper presents an approximation model for coordinated control of one-warehouse multiple-retailer inventory systems, where all locations use continuous review (RnQ) policies. The motivation stems from close collaboration with a supply chain management software company, Syncron International, and one of their customers. A core objective has been to develop an accurate method for determining near-optimal reorder points that can be directly applied to real-life systems. The approach is based on decomposing the complex multi-echelon problem into N + 1 single-echelon problems, using a near-optimal-induced backorder cost at the central warehouse. Important extensions made compared to earlier work include the addition of procedures to adjust for lead-time variability, and for undershooting the reorder point when customers’ order sizes vary. The result is a flexible model that is computationally and conceptually simple enough to be implemented in practice. A numerical study, including real data from the case company, illustrates that the new model outperforms existing methods in the literature. Compared to the current methods used by the case company, it offers significant improvements in both service-level fulfilment and system-wide inventory holding costs. Implementations of the model into the Syncron software are in progress.

Place, publisher, year, edition, pages
2014. Vol. 52, no 11, p. 3331-3347
Keywords [en]
Inventory control, Stochastic models, Safety stocks, Heuristics, Vendor-managed inventory, Supply chain management
National Category
Transport Systems and Logistics Business Administration
Research subject
Technology (byts ev till Engineering), Industrial economy; Economy, Business administration; Economy, Logistics
Identifiers
URN: urn:nbn:se:lnu:diva-32277DOI: 10.1080/00207543.2013.873555OAI: oai:DiVA.org:lnu-32277DiVA, id: diva2:696089
Note

A corrigendum to this article was published in 2017:

(2017) Corrigendum, International Journal of Production Research, 55:17, 5183, DOI: 10.1080/00207543.2017.1322671

Available from: 2014-02-12 Created: 2014-02-12 Last updated: 2018-03-26Bibliographically approved

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Berling, Peter

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CiteExportLink to record
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Citation style
  • apa
  • harvard1
  • ieee
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More styles
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  • en-US
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  • nn-NO
  • nn-NB
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  • Other locale
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Output format
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