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A model for heuristic coordination of real life distribution inventory systems with lumpy demand
Lund University. (Supply Chain Studies)
Lund University.
2013 (English)In: European Journal of Operational Research, ISSN 0377-2217, E-ISSN 1872-6860, Vol. 230, no 3, 515-526 p.Article in journal (Refereed) Published
Abstract [en]

This paper presents an approximation model for optimizing reorder points in one-warehouse N-retailerinventory systems subject to highly variable lumpy demand. The motivation for this work stems fromclose cooperation with a supply chain management software company, Syncron International, and oneof their customers, a global spare parts provider. The model heuristically coordinates the inventory systemusing a near optimal induced backorder cost at the central warehouse. This induced backorder costcaptures the impact that a reorder point decision at the warehouse has on the retailers’ costs, and decomposesthe multi-echelon problem into solving N + 1 single-echelon problems. The decomposition frameworkrenders a flexible model that is computationally and conceptually simple enough to beimplemented in practice.A numerical study, including real data from the case company, shows that the new model performsvery well in comparison to existing methods in the literature, and offers significant improvements tothe case company. With regards to the latter, the new model in general obtains realized service levelsmuch closer to target while reducing total inventory.

Place, publisher, year, edition, pages
2013. Vol. 230, no 3, 515-526 p.
Keyword [en]
Inventory/production, Multi-echelon, Policies, Continuous review, Stochastic, Poisson demand
National Category
Business Administration Production Engineering, Human Work Science and Ergonomics
Research subject
Economy, Business administration; Economy, Logistics; Technology (byts ev till Engineering), Industrial economy
Identifiers
URN: urn:nbn:se:lnu:diva-29720DOI: 10.1016/j.ejor.2013.04.053OAI: oai:DiVA.org:lnu-29720DiVA: diva2:658235
Available from: 2013-10-21 Created: 2013-10-21 Last updated: 2017-12-06Bibliographically approved

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Berling, Peter

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CiteExportLink to record
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Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf