Materials coordination in stochastic multi-echelon systems

This paper reviews the theoretical and numerical analysis of stochastic multi-echelon systems. We discuss both production (assembly) and distribution models, with an emphasis on materials coordination problems. Extensions to capacitated systems are also treated. The emphasis of this paper is on applicability of the models; in particular we characterize environments where multi-echelon models naturally fit. In particular, we discuss numerical procedures which allow for a quick and accurate evaluation of systems of realistic size and show how to use them to arrive at target service levels in serial and assembly systems. Extensions to capacitated systems and more flexible production environments are also discussed.