We consider a continuous-review two-echelon distribution network with one central
warehouse and multiple local stock points, each facing independent Poisson demand
for one item. Demands are fulfilled from stock if possible and backordered otherwise.
We assume base stock control with one-for-one replenishments and the goal is to
minimize the inventory holding and backordering costs. Although this problem is
widely studied, only enumerative procedures are known for the exact optimization.
A number of heuristics exist, but they ??nd solutions that are far from optimal in
some cases (over 20% error on realistic problem instances). We propose a heuristic
that is computationally e??cient and ??nds solutions that are close to optimal: 0.1%
error on average and less than 3.0% error at maximum on realistic problem instances
in our computational experiment.
|Place of Publication||Eindhoven|
|Publisher||Technische Universiteit Eindhoven|
|Number of pages||25|
|Publication status||Published - 2010|
|Name||BETA publicatie : working papers|