Efficient computation of time-based customer service levels in a multi-item, multi-echelon supply chain: A practical approach for inventory optimization

Kathryn E. Caggiano, Peter L. Jackson, John A. Muckstadt and James A. Rappold

European Journal of Operational Research, 2009, vol. 199, issue 3, 744-749

Abstract: Time-based item fill rates, or "channel" fill rates, are the building blocks needed to evaluate steady-state compliance with time-based customer service agreements. Exact computation of channel fill rates is both difficult and time-consuming, yet their accurate assessment is essential for system-wide inventory optimization. We describe and validate a practical method for computing channel fill rates in a multi-item, multi-echelon service parts distribution system. A simulation study is presented which shows that, in a three-echelon setting, our estimation errors are very small over a wide range of base stock level vectors. A more accurate, though less efficient, approximation method is also evaluated for comparison.

Keywords: Inventory; and; service; optimization; Distribution; resource; planning; Multi-echelon; inventory; Service; parts; management; Time-based; fill; rates; Modeling; methodologies (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:199:y:2009:i:3:p:744-749

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