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Multiechelon ( R, S ) Inventory Model *
Author(s) -
Sinha Diptendu,
Matta Khalil F.
Publication year - 1991
Publication title -
decision sciences
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.238
H-Index - 108
eISSN - 1540-5915
pISSN - 0011-7315
DOI - 10.1111/j.1540-5915.1991.tb01276.x
Subject(s) - inventory theory , computer science , computation , inventory control , operations research , mathematical optimization , order (exchange) , simple (philosophy) , inventory management , economic order quantity , operations management , economics , mathematics , algorithm , business , supply chain , philosophy , finance , epistemology , marketing
Most studies in multiechelon inventory systems have concentrated on understanding the specific aspects of a system's behavior. The problem of optimal policy computation has largely been ignored. In this paper, we investigate a two‐echelon inventory system experiencing stochastic demand and a pull system of inventory allocation. Both echelons use an order‐up‐to‐level type control policy. A mathematical model is developed to determine the optimal order level at all echelons and validated through simulation. Two simple algorithms to locate the optimum solution are presented. The use of graphical tools in optimal policy calculation is also discussed.