A Simple Method of Determining Order Quantities in Joint Replenishments Under Deterministic Demand

Edward A. Silver
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Edward A. Silver: University of Waterloo

Management Science, 1976, vol. 22, issue 12, 1351-1361

Abstract: We consider the situation of a family of items sharing a common supplier or common production facility. There is a major setup (header) cost to make a replenishment of the family and a minor (line) cost for each item included in the replenishment. In such a setting it makes sense to coordinate replenishments of the various items of a family. Under the assumption of deterministic demand, several authors have suggested iterative solutions which are not necessarily guaranteed to be optimal, yet are not easy to implement. We present an alternative procedure which is extremely simple to use, yet appears to have rather small cost penalties in relation to the earlier more sophisticated methods.

Date: 1976
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