Stock redistribution in two-echelon logistics systems
- PDF / 308,580 Bytes
- 10 Pages / 595 x 842 pts (A4) Page_size
- 30 Downloads / 177 Views
#1998 Operational Research Society Ltd. All rights reserved. 0160-5682/98 $12.00 http://www.stockton-press.co.uk/jor
Stock redistribution in two-echelon logistics systems LP Bertrand1 and JH Bookbinder2 1
DMR, Inc. and 2University of Waterloo, Ontario, Canada
Consider a two-echelon periodic-review network consisting of a warehouse W and retailers R1 ; . . . ; Rn . Between replenishments of the overall system, stocks at certain retailers may become unbalanced. Therefore we allow, at a cost, the possibility of a lateral supply between retailers. This constitutes a `redistribution', horizontal shipments made one period before the next regular replenishment opportunity. A stochastic inventory model is presented for such a system whose multiple stock-keeping locations have nonidentical costs; this is a major difference between the research reported here and previous work on redistribution. We developed an algorithm for carrying out the redistribution, and prove that the result is near optimal. A combination of analytical and simulation results quantify the bene®ts (lower costs and decreased safety stock) to our redistribution model. The resulting cost and service are compared to those of the simple allocation model (no lateral transshipments). Our cost-minimisation model is also compared to the complete redistribution model of Jonsson and Silver,1 who minimised backorders. Keywords: allocation (stock); inventory; logistics; redistribution; retailers (non-identical); transshipments (lateral)
Introduction The growing literature on multi-echelon inventory control typically deals with arborescent systems, where stock ¯ows from the root (central warehouse) to the leaves (retailers at the lowest level), but where lateral shipments between nodes of the same level are not permissible. Let us de®ne a redistribution model as one which incorporates the possibility of horizontal shipments between stock-keeping locations at the same echelon. Such a redistribution of stock, occurring before the next regular replenishment from the central warehouse, is thus not considered in most of the published inventory literature. In that dominant stream of research, the warehouse (Figure 1) replenishes each retailer Ri based on demand forecasts over a time horizon for that location. But having received those initial allocations of stock, and even after early realisations of demand are known, no shipments would be made by any retailer Rj with excess stock to a retailer Rk whose actual demand was greater than predicted. It is common in practice, however, that lateral transshipments be used as a recourse to avoid shortages. Redistribution is especially helpful when stock replenishment occurs periodically for the entire system because, as noted in the previous paragraph, stochastic demands will cause some locations to face shortages while others have more inventory than needed. Lateral transshipment will clearly lessen the total expected number of units backordered. It may be economically preferable to redistribute the stock rather than for Rk Cor
Data Loading...
