On the effect of inventory policies on distribution network design with several demand classes

P. Escalona, V. Marianov, F. Ordóñez and R. Stegmaier

Transportation Research Part E: Logistics and Transportation Review, 2018, vol. 111, issue C, 229-240

Abstract: This paper studies the effect of several inventory policies on the design of a distribution network for fast-moving items able to provide differentiated service levels in terms of product availability for several demand classes. We consider the distribution network design problem when the global round-up, single class allocation, local separate stock, local round-up, and critical level inventory policies are used. We show how to formulate these problems as conic quadratic mixed-integer problems and prove that the critical level policy provides the lowest cost distribution network design. Further results and a computational study show how these different models compare in practice.

Keywords: Location-inventory model; Several demand classes; Conic quadratic mixed-integer problem; Inventory policy comparison (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (3)

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DOI: 10.1016/j.tre.2017.10.019

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