Exact and Approximate Evaluation of Batch-Ordering Policies for Two-Level Inventory Systems

Sven Axsäter
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Sven Axsäter: Luleå University of Technology, Luleå, Sweden

Operations Research, 1993, vol. 41, issue 4, 777-785

Abstract: We consider a two-level inventory system with one warehouse and N identical retailers. Lead times (transportation times) are constant and the retailers face independent Poisson demand. In a previous paper, we derived a recursive procedure for determining the policy costs for an average item in case of one-for-one replenishment policies. In this paper, we show how these results can be used for the exact or approximate evaluation of more general policies where both the retailers and the warehouse order in batches. We compare our methods to the method recently suggested by A. Svoronos and P. Zipkin.

Keywords: inventory/production; multi-echelon: batch-ordering policies; identical retailers; inventory/production; stochastic: Poisson demand; continuous review (search for similar items in EconPapers)
Date: 1993
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