Stock allocation in a two-echelon distribution system controlled by (s, S) policies

Haoxun Chen, Bo Dai, Yuan Li, Yidong Zhang, Xiaoqing Wang and Yuming Deng

International Journal of Production Research, 2022, vol. 60, issue 3, 894-911

Abstract: Stock allocation is an important decision in distribution systems, which determines how the on-hand inventory of an upstream stock is allocated to its immediate downstream stocks if their replenishment orders cannot be fulfilled completely. In the literature, almost all studies assume each stock in a distribution system is controlled by a base stock policy, although a real system may be controlled by (s, S) policies because of the existence of fixed ordering costs. In this paper, we study stock allocation in a real distribution system of Alibaba and propose two easy-to-implement Allocation-to-S methods that are more effective than three well-known rationing rules and a rationing rule currently used in Alibaba. For the 300 instances tested, one of the methods can reduce the expected cost per period by more than 1.5% and improve the service level by more than 1.3% on average with respect to the best of the four rules. In addition, a general procedure is provided to solve the imbalance problem of linear rationing rules which include the rules.

Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1080/00207543.2020.1845915 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:tprsxx:v:60:y:2022:i:3:p:894-911

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/TPRS20

DOI: 10.1080/00207543.2020.1845915

Access Statistics for this article

International Journal of Production Research is currently edited by Professor A. Dolgui

More articles in International Journal of Production Research from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().