Using break quantities for tactical optimisation in multistage distribution systems

Marcel Kleijn and Rommert Dekker

No EI 9737/A, Econometric Institute Research Papers from Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute

Abstract: In this chapter we discuss a tactical optimisation problem that arises in a multistage distribution system where customer orders can be delivered from any stockpoint. A simple rule to allocate orders to locations is a break quantity rule, which routes large orders to higher-stage stockpoints and small orders to end-stockpoints. A so-called break quantity determines whether an order is small or large. We present a qualitative discussion on the implications of this rule for the marketing process, and a qualitative and quantitative analysis on the implications for the transportation and inventory costs. Furthermore, we present a case study for a company that implemented a break quantity rule. Finally, in the last section the main results are summarised.

Keywords: break quantity rule; distribution systems; inventory; marketing; transportation (search for similar items in EconPapers)
Date: 1997-01-01
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Citations: View citations in EconPapers (2)

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Working Paper: Using Break Quantities for Tactical Optimisation in Multistage Distribution Systems (1997)
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