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Inventory rationing and sharing in pre-sell distribution with mobile communication technologies

Grigory Pishchulov () and Knut Richter

International Journal of Production Economics, 2009, vol. 121, issue 2, 584-600

Abstract: In pre-sell distribution, the uncertain customer demands are revealed by the company's sales representatives who visit the customers and arrange delivery quantities on the spot, prior to physical execution of deliveries. Given a periodic base-stock of a distributed product, we consider allocation of the product to the customers in two different settings: with and without utilization of mobile communication technologies. There are two performance measures considered: the customer-average fill rate, and the sales profit under service level constraints. The mobile setting is shown to enable a generally better system-wide performance, featuring the capability of inventory pooling. To observe the magnitude of this advantage we determine the optimal allocation policies by means of stochastic dynamic programming. Computational examples for selected configurations and demand distributions are presented.

Keywords: Inventory; pooling; Inventory; rationing; Pre-sell; Mobile; communication; technologies; Stochastic; programming (search for similar items in EconPapers)
Date: 2009
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Handle: RePEc:eee:proeco:v:121:y:2009:i:2:p:584-600