Heuristic and Exact Evaluation of Two-Echelon Inventory Systems
(2022) In Bachelor's Theses in Mathematicas Sciences MASK11 20221Mathematical Statistics
- Abstract
- The main theme of this project is inventory control with stochastic demand. In this thesis, we consider a two-echelon inventory system that consists of one central warehouse and N retail stores. Customer demands at the retailers follow independent Poisson demand processes and each customer only demands one unit. Customer demands which are not satisfied directly from stock on hand are assumed to backordered, i.e., no lost sales exist. All transportation times are assumed to be constant. Replenishment, at the warehouse and at each retailer,
is made according to so-called order-up-to-S policies (also denoted as (S − 1, S)-policies). The first main goal is to derive an expected system cost function which consists of inventory holding costs... (More) - The main theme of this project is inventory control with stochastic demand. In this thesis, we consider a two-echelon inventory system that consists of one central warehouse and N retail stores. Customer demands at the retailers follow independent Poisson demand processes and each customer only demands one unit. Customer demands which are not satisfied directly from stock on hand are assumed to backordered, i.e., no lost sales exist. All transportation times are assumed to be constant. Replenishment, at the warehouse and at each retailer,
is made according to so-called order-up-to-S policies (also denoted as (S − 1, S)-policies). The first main goal is to derive an expected system cost function which consists of inventory holding costs and backorder costs. Secondly, we will optimize this cost function with respect to the base-stock levels Si, i = 0, . . . , N , where Si represents the base-stock-level at retailer
i (index 0 is for the warehouse).
We will first consider an exact method to optimize the expected system cost function. In this exact method, the lead-times for the retail stores are stochastic due to possible delays when replenishing from the central warehouse. However, in practice, it is common to use an approximate method where the stochastic lead-times for the retailers are replaced by the corresponding mean values. Here, we will investigate the robustness of this approximate method in terms of changes in system parameters. (Less) - Popular Abstract
- The essence of inventory control is to decide when we should order new items and how much we should order. With an efficient inventory control model, companies can maximize their profits and avoid stocking up unnecessary amounts of goods in warehouses.
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9094159
- author
- Sigurdardottir, Gudborg Nanna LU
- supervisor
- organization
- alternative title
- Exakt och approximativ analys av lagersystem i två nivåer
- course
- MASK11 20221
- year
- 2022
- type
- M2 - Bachelor Degree
- subject
- keywords
- Inventory Control, Single-echelon model, Two-Echelon model
- publication/series
- Bachelor's Theses in Mathematicas Sciences
- report number
- LUNFMS-4064-2022
- ISSN
- 1654-6229
- other publication id
- 2022:K9
- language
- English
- id
- 9094159
- date added to LUP
- 2022-06-30 10:18:38
- date last changed
- 2022-07-20 13:22:57
@misc{9094159, abstract = {{The main theme of this project is inventory control with stochastic demand. In this thesis, we consider a two-echelon inventory system that consists of one central warehouse and N retail stores. Customer demands at the retailers follow independent Poisson demand processes and each customer only demands one unit. Customer demands which are not satisfied directly from stock on hand are assumed to backordered, i.e., no lost sales exist. All transportation times are assumed to be constant. Replenishment, at the warehouse and at each retailer, is made according to so-called order-up-to-S policies (also denoted as (S − 1, S)-policies). The first main goal is to derive an expected system cost function which consists of inventory holding costs and backorder costs. Secondly, we will optimize this cost function with respect to the base-stock levels Si, i = 0, . . . , N , where Si represents the base-stock-level at retailer i (index 0 is for the warehouse). We will first consider an exact method to optimize the expected system cost function. In this exact method, the lead-times for the retail stores are stochastic due to possible delays when replenishing from the central warehouse. However, in practice, it is common to use an approximate method where the stochastic lead-times for the retailers are replaced by the corresponding mean values. Here, we will investigate the robustness of this approximate method in terms of changes in system parameters.}}, author = {{Sigurdardottir, Gudborg Nanna}}, issn = {{1654-6229}}, language = {{eng}}, note = {{Student Paper}}, series = {{Bachelor's Theses in Mathematicas Sciences}}, title = {{Heuristic and Exact Evaluation of Two-Echelon Inventory Systems}}, year = {{2022}}, }