Optimization of order‐up‐to‐s policies in two‐echelon inventory systems with periodic review

Sven Axsäter

Naval Research Logistics (NRL), 1993, vol. 40, issue 2, 245-253

Abstract: We consider an inventory system with one warehouse and N retailers. Transportation times are constant and the retailers face independent Poisson demand. Each facility applies a periodic review order‐up‐to‐S policy. In case of shortages at the warehouse, orders for individual units are filled in the same order as the original demand at the retailers, i.e., according to a so‐called virtual allocation scheme. Using that the considered policy is very similar to a continuous review one‐for‐one ordering policy, we are able to provide simple recursive procedures for exact evaluation of holding and shortage costs. © 1993 John Wiley & Sons, Inc.

Date: 1993
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https://doi.org/10.1002/1520-6750(199303)40:23.0.CO;2-M

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Persistent link: https://EconPapers.repec.org/RePEc:wly:navres:v:40:y:1993:i:2:p:245-253

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