Exact Methods for Multiechelon Inventory Control : Incorporating Shipment Decisions and Detailed Demand Information
(2016) Abstract
 Recent advances in information technologies and an increased environmental awareness have altered the prerequisites for successful logistics. For companies operating on a global market, inventory control of distribution systems is often an essential part of their logistics planning. In this context, the research objective of this thesis is:
To develop exact methods for stochastic inventory control of multiechelon distribution systems incorporating shipment decisions and/or detailed demand information.
The thesis consists of five scientific papers (Paper I, II, III, IV and V) preceded by a summarizing introduction. All papers study systems with a central warehouse supplying a number of nonidentical local warehouses... (More)  Recent advances in information technologies and an increased environmental awareness have altered the prerequisites for successful logistics. For companies operating on a global market, inventory control of distribution systems is often an essential part of their logistics planning. In this context, the research objective of this thesis is:
To develop exact methods for stochastic inventory control of multiechelon distribution systems incorporating shipment decisions and/or detailed demand information.
The thesis consists of five scientific papers (Paper I, II, III, IV and V) preceded by a summarizing introduction. All papers study systems with a central warehouse supplying a number of nonidentical local warehouses (retailers) facing stochastic demand. For given replenishment policies, the papers provide exact expressions for evaluating the expected longrun system behavior (e.g., distributions of backorders, inventory levels, shipment sizes and expected costs) and present optimization procedures for the control variables.
Paper I and II consider systems where shipments from the central warehouse are consolidated to groups of retailers and dispatched periodically. By doing so, economies of scale for the transports can be reached, reducing both transportation costs and emissions. Paper I assumes Poisson customer demand and considers volumedependent transportation costs and emissions. The model involves the possibility to reserve intermodal (train) capacity in combination with truck transports available on demand. For this system, the expected inventory costs, the expected transportation costs and the expected transport emissions are determined. Joint optimization procedures for the shipment intervals, the capacity reservation quantities, the reorder points and orderupto levels in the system are provided, with or without emission considerations. Paper II analyses the expected costs of the same system for compound Poisson demand (where customer demand sizes may vary), but with only one transportation mode and fixed transportation costs per shipment. It also shows how to handle fill rate constraints.
Paper III studies a system where all stock points use installation stock (R,Q) ordering policies (batch ordering). This implies that situations can occur when only part of a requested retailer order is available at the central warehouse. In these situations, the models in existing literature predominantly assume that available units are shipped immediately (partial delivery). An alternative is to wait until the entire order is available before dispatching (complete delivery). The paper introduces a cost for splitting the order and evaluates a system where optimal choices between partial and complete deliveries are made for all orders. In a numerical study it is shown that significant savings can be made by using this policy compared to systems which exclusively use either partial or complete deliveries.
Paper IV shows how companies can benefit from detailed information about their customer demand. In a continuous review base stock system, the customer demand is modeled with independent compound renewal processes at the retailers. This means that the customer interarrival times may follow any continuous distribution and the demand sizes may follow any discrete distribution. A numerical study shows that this model can achieve substantial savings compared to models using the common assumption of exponential customer interarrival times.
Paper V is a short technical note that extends the scope of analysis for several existing stochastic multiechelon inventory models. These models analyze the expected costs without first determining the inventory level distribution. By showing how these distributions can be obtained from the expected cost functions, this note facilitates the analysis of several service measures, including the ready rate and the fill rate.
(Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/record/8871366
 author
 Stenius, Olof ^{LU}
 supervisor
 opponent

 Professor van Houtum, GeertJan, Technische Universiteit Eindhoven, Nederländerna
 organization
 publishing date
 2016
 type
 Thesis
 publication status
 published
 subject
 keywords
 Inventory, Multiechelon, Stochastic, Shipment decisions, Detailed demand information
 pages
 217 pages
 defense location
 M E, Mbuilding, Ole Römers väg 1, Lund University, Faculty of Engineering
 defense date
 20160513 10:15
 ISBN
 9789176237946
 language
 English
 LU publication?
 yes
 id
 67ea9ef37c30457d828a5ed4fb332552 (old id 8871366)
 date added to LUP
 20160414 10:59:38
 date last changed
 20160919 08:45:20
@misc{67ea9ef37c30457d828a5ed4fb332552, abstract = {Recent advances in information technologies and an increased environmental awareness have altered the prerequisites for successful logistics. For companies operating on a global market, inventory control of distribution systems is often an essential part of their logistics planning. In this context, the research objective of this thesis is: <br/><br/>To develop exact methods for stochastic inventory control of multiechelon distribution systems incorporating shipment decisions and/or detailed demand information.<br/><br/>The thesis consists of five scientific papers (Paper I, II, III, IV and V) preceded by a summarizing introduction. All papers study systems with a central warehouse supplying a number of nonidentical local warehouses (retailers) facing stochastic demand. For given replenishment policies, the papers provide exact expressions for evaluating the expected longrun system behavior (e.g., distributions of backorders, inventory levels, shipment sizes and expected costs) and present optimization procedures for the control variables.<br/> Paper I and II consider systems where shipments from the central warehouse are consolidated to groups of retailers and dispatched periodically. By doing so, economies of scale for the transports can be reached, reducing both transportation costs and emissions. Paper I assumes Poisson customer demand and considers volumedependent transportation costs and emissions. The model involves the possibility to reserve intermodal (train) capacity in combination with truck transports available on demand. For this system, the expected inventory costs, the expected transportation costs and the expected transport emissions are determined. Joint optimization procedures for the shipment intervals, the capacity reservation quantities, the reorder points and orderupto levels in the system are provided, with or without emission considerations. Paper II analyses the expected costs of the same system for compound Poisson demand (where customer demand sizes may vary), but with only one transportation mode and fixed transportation costs per shipment. It also shows how to handle fill rate constraints.<br/> Paper III studies a system where all stock points use installation stock (R,Q) ordering policies (batch ordering). This implies that situations can occur when only part of a requested retailer order is available at the central warehouse. In these situations, the models in existing literature predominantly assume that available units are shipped immediately (partial delivery). An alternative is to wait until the entire order is available before dispatching (complete delivery). The paper introduces a cost for splitting the order and evaluates a system where optimal choices between partial and complete deliveries are made for all orders. In a numerical study it is shown that significant savings can be made by using this policy compared to systems which exclusively use either partial or complete deliveries.<br/> Paper IV shows how companies can benefit from detailed information about their customer demand. In a continuous review base stock system, the customer demand is modeled with independent compound renewal processes at the retailers. This means that the customer interarrival times may follow any continuous distribution and the demand sizes may follow any discrete distribution. A numerical study shows that this model can achieve substantial savings compared to models using the common assumption of exponential customer interarrival times.<br/> Paper V is a short technical note that extends the scope of analysis for several existing stochastic multiechelon inventory models. These models analyze the expected costs without first determining the inventory level distribution. By showing how these distributions can be obtained from the expected cost functions, this note facilitates the analysis of several service measures, including the ready rate and the fill rate.<br/>}, author = {Stenius, Olof}, isbn = {9789176237946 }, keyword = {Inventory,Multiechelon,Stochastic,Shipment decisions,Detailed demand information}, language = {eng}, pages = {217}, title = {Exact Methods for Multiechelon Inventory Control : Incorporating Shipment Decisions and Detailed Demand Information}, year = {2016}, }