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Optimization of order‐up‐to‐s policies in two‐echelon inventory systems with periodic review
Author(s) -
Axsäter Sven
Publication year - 1993
Publication title -
naval research logistics (nrl)
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.665
H-Index - 68
eISSN - 1520-6750
pISSN - 0894-069X
DOI - 10.1002/1520-6750(199303)40:2<245::aid-nav3220400208>3.0.co;2-m
Subject(s) - economic shortage , order (exchange) , warehouse , computer science , operations research , perpetual inventory , economic order quantity , simple (philosophy) , constant (computer programming) , order picking , holding cost , inventory theory , poisson distribution , inventory management , mathematical optimization , operations management , economics , business , mathematics , marketing , statistics , supply chain , finance , linguistics , philosophy , epistemology , government (linguistics) , programming language
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.