Premium
PLANNING MULTIPLE LOCATION INVENTORIES
Author(s) -
Ballou Ronald H.,
Burnetas Apostolos
Publication year - 2003
Publication title -
journal of business logistics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.611
H-Index - 79
eISSN - 2158-1592
pISSN - 0735-3766
DOI - 10.1002/j.2158-1592.2003.tb00046.x
Subject(s) - stock (firearms) , perpetual inventory , safety stock , business , inventory management , reorder point , point (geometry) , operations management , inventory valuation , operations research , marketing , computer science , inventory control , inventory theory , economics , finance , supply chain , mathematics , economic order quantity , engineering , mechanical engineering , geometry
Supplying customer demand from comparable alternate inventory locations when an item is out of stock at its primary stocking point creates a virtual inventory for that item. The expectation is that if more inventories can be drawn upon, the inventory for an item would be lower, the fill rate would be higher, or both. While generally true that safety stocks will be lower, regular stocks, on the other hand, may rise with such cross filling of demand. In this study, a methodology is developed that balances the cross filling effects on both regular and safety stocks for determining whether an inventoried item should be cross‐filled. An example and guidelines are given to show how the methodology can be simplified and applied in practice.