Transshipments in a divergent two-echelon network using the consistent appropiate share rationing policy

E.B. Diks, A.G. Kok, de

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Consider a two-echelon inventory system consisting of a central depot (CD) and a number of retailers. Only the retailers face customer demand. The CD is allowed to hold stock. In all stockpoints, the echelon inventory position is periodically raised to certain order-up-to-Ievels. At the central depot, incoming stock is allocated by using the consistent appropriate share rationing (CAS) policy. When the orders arrive at the retailers, an instantaneous rebalancing of the total net stock of the retailers takes place, so as to maintain all end-stockpoint inventory at a balanced position. This rebalancing is realized by the transshipment of stock, assuming that the time to transship stock from one retailer to another is negligible compared to the lead time between CD and a retailer. The objective of this analysis is the determination of all the control parameters (integral order-up-to-Ievel, parameters of allocation policy at the CD and of the rebalancing policy at the retailer), so that the desired (different) service levels are achieved at the retailers at minimal expected total costs. Exact expressions are developed to determine these parameters. However, we will use some heuristics to actually compute these parameters, because of the intractability of the exact expressions. All analytical results are validated by Monte-Carlo simulation. The model developed will be compared with the same model without periodic, instantaneous rebalancing at the retailer. This yields insight into the conditions under which transshipment could be useful.
Originele taal-2Engels
Plaats van productieEindhoven
UitgeverijTechnische Universiteit Eindhoven
Aantal pagina's28
StatusGepubliceerd - 1995

Publicatie series

NaamMemorandum COSOR
Volume9531
ISSN van geprinte versie0926-4493

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