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Evaluation of stock allocation policies in a divergent inventory system with shipment consolidation

Howard, Christian LU and Marklund, Johan LU (2011) In European Journal of Operational Research 211(2). p.298-309
Abstract
In this paper we consider a one-warehouse N-retailer inventory system characterized by access to real-time point-of-sale data, and a time based dispatching and shipment consolidation policy at the warehouse. More precisely, inventory is reviewed continuously, while a consolidated shipment (for example, a truck) to all retailers is dispatched from the warehouse at regular time intervals. The focus is on investigating the cost benefits of using state-dependent myopic allocation policies instead of a simple FCFS (First-Come-First-Serve) rule to allocate shipped goods to the retailers. The analysis aims to shed some light on when, if ever, FCFS is a reasonable policy to use in this type of system? The FCFS allocations of items to retailers are... (More)
In this paper we consider a one-warehouse N-retailer inventory system characterized by access to real-time point-of-sale data, and a time based dispatching and shipment consolidation policy at the warehouse. More precisely, inventory is reviewed continuously, while a consolidated shipment (for example, a truck) to all retailers is dispatched from the warehouse at regular time intervals. The focus is on investigating the cost benefits of using state-dependent myopic allocation policies instead of a simple FCFS (First-Come-First-Serve) rule to allocate shipped goods to the retailers. The analysis aims to shed some light on when, if ever, FCFS is a reasonable policy to use in this type of system? The FCFS allocations of items to retailers are determined by the sequence in which retailer orders (or equivalently customer demands) arrive to the warehouse. Applying the myopic policy enables the warehouse to postpone the allocation decision to the moment of shipment (from the warehouse) or the moments of delivery (to the different retailers), and to base it on the inventory information available at those times. The myopic allocation method we study is often used in the literature on periodic review systems. (C) 2010 Elsevier B.V. All rights reserved. (Less)
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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Inventory, Stock allocation, Shipment consolidation, Multi-echelon, Stochastic, Continuous review
in
European Journal of Operational Research
volume
211
issue
2
pages
298 - 309
publisher
Elsevier
external identifiers
  • wos:000288308800008
  • scopus:79951681586
ISSN
0377-2217
DOI
10.1016/j.ejor.2010.11.030
language
English
LU publication?
yes
id
d3285e45-ea75-4ef9-9056-c833f0a4970a (old id 1936232)
date added to LUP
2011-05-10 09:06:42
date last changed
2017-09-10 03:06:43
@article{d3285e45-ea75-4ef9-9056-c833f0a4970a,
  abstract     = {In this paper we consider a one-warehouse N-retailer inventory system characterized by access to real-time point-of-sale data, and a time based dispatching and shipment consolidation policy at the warehouse. More precisely, inventory is reviewed continuously, while a consolidated shipment (for example, a truck) to all retailers is dispatched from the warehouse at regular time intervals. The focus is on investigating the cost benefits of using state-dependent myopic allocation policies instead of a simple FCFS (First-Come-First-Serve) rule to allocate shipped goods to the retailers. The analysis aims to shed some light on when, if ever, FCFS is a reasonable policy to use in this type of system? The FCFS allocations of items to retailers are determined by the sequence in which retailer orders (or equivalently customer demands) arrive to the warehouse. Applying the myopic policy enables the warehouse to postpone the allocation decision to the moment of shipment (from the warehouse) or the moments of delivery (to the different retailers), and to base it on the inventory information available at those times. The myopic allocation method we study is often used in the literature on periodic review systems. (C) 2010 Elsevier B.V. All rights reserved.},
  author       = {Howard, Christian and Marklund, Johan},
  issn         = {0377-2217},
  keyword      = {Inventory,Stock allocation,Shipment consolidation,Multi-echelon,Stochastic,Continuous review},
  language     = {eng},
  number       = {2},
  pages        = {298--309},
  publisher    = {Elsevier},
  series       = {European Journal of Operational Research},
  title        = {Evaluation of stock allocation policies in a divergent inventory system with shipment consolidation},
  url          = {http://dx.doi.org/10.1016/j.ejor.2010.11.030},
  volume       = {211},
  year         = {2011},
}