ANALYSIS OF TWO ECHELON INVENTORY SYSTEM WITH JOINT ORDERING POLICY (original) (raw)
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Cost Optimization of Inventory System in Two-Echelon with Two Suppliers
Zenodo (CERN European Organization for Nuclear Research), 2017
This paper presents a continuous review two echelon inventory system. The operating policy at the lower echelon is (s, S) that is whenever the inventory level traps to s on order for Q = (S-s) items is placed, the ordered items are received after a random time which is distributed as exponential. We assume that the demands accruing during the stock-out period are lost. The retailer replenishes their stock from the regular supplier which adopts (0, M) policy, M = nQ. When the regular supplier stock is empty the replacement of retailer stock made by the outside supplier who adopts (0, N) policy N = nQ. The joint probability disruption of the inventory levels of retailer, regular supplier and the outside supplier are obtained in the steady state case. Various system performance measures are derived and the long run total expected inventory cost rate is calculated. Several instances of numerical examples, which provide insight into the behavior of the system are presented.
Analysis of a Two-Echelon Inventory System With Two Supply Modes
2010
In this paper, we consider a serial two-echelon periodic review inventory system with two supply modes at the most upstream stock point. As control policy for this system, we propose a natural extension of the dual-index policy, which has three base-stock levels. We consider the minimization of long run average inventory holding, backlogging, and both per unit and fixed emergency ordering costs. We provide nested newsboy characterizations for two of the three base-stock levels involved and show a separability result for the difference with the remaining base-stock level. We use results for the single-echelon system to efficiently approximate the distributions of random variables involved in the newsboy equations and find an asymptotically correct approximation for both the per unit and fixed emergency ordering costs. Based on these results, we provide an algorithm for setting base-stock levels in a computationally efficient manner. In a numerical study, we investigate the value of dual-sourcing in supply chains and show that it is useful to decrease upstream stock levels. In cases with high demand uncertainty, high backlogging cost or long lead times, we conclude that dual-sourcing can lead to significant savings.
Materials Today: Proceedings, 2018
In this paper, a two echelon inventory system with a single-warehouse and single-retailer is considered. Mathematical model is developed for the retailer, warehouse and for the entire chain by incorporating the ordering/setup costs, carrying costs and transportation costs. Replenishment quantity at the retailer and the number of shipments from the warehouse to the retailer are considered as the decision variables. The objective of the proposed work is to demonstrate the optimality of centralised inventory & shipment decisions and total relevant costs at the respective entities and the chain. Numerical example is considered and the model is solved using the computer program written in MATLAB. From the research findings, it is concluded that the percentage variation in optimality of total transportation cost of the supply chain is in decreasing order with respect to the increased ordering cost of the retailer and setup cost of the manufacturer. Finally, few managerial implications are derived based on the sensitivity analysis.
A two-echelon inventory model with lost sales
International Journal of Production Economics, 2001
This paper considers a single-item, two-echelon, continuous-review inventory model. A number of retailers have their stock replenished from a central warehouse. The warehouse in turn replenishes stock from an external supplier. The demand processes on the retailers are independent Poisson. Demand not met at a retailer is lost. The order quantity from each retailer on the warehouse and from the warehouse on the supplier takes the same fixed value Q, an exogenous variable determined by packaging and handling constraints. Retailer i follows a (Q, R i ) control policy. The warehouse operates an (SQ, (S À 1)Q) policy, with non-negative integer S. If the warehouse is in stock then the lead time for retailer i is the fixed transportation time L i from the warehouse to that retailer. Otherwise retailer orders are met, after a delay, on a first-come first-served basis. The lead time on a warehouse order is fixed. Two further assumptions are made: that each retailer may only have one order outstanding at any time and that the transportation time from the warehouse to a retailer is not less than the warehouse lead time. The performance measures of interest are the average total stock in the system and the fraction of demand met in the retailers. Procedures for determining these performance measures and optimising the behaviour of the system are developed.
International Journal of Business Performance and Supply Chain Modelling, 2011
This paper deals with a two-echelon inventory system consisting of one supplier and N retailers. Each retailer faces an independent Poisson demand with the same rate and applies a new ordering policy called one-for-one-period ordering policy for its inventory control. In this ordering policy, the order size is equal to one and the time interval between any two consecutive orders forms a common fixed cycle. Thus, the supplier faces a deterministic demand and adopts a deterministic inventory policy. At each cycle, he orders a batch of size N to his own supplier. Upon receipt of each batch, he sends one unit of the product to each retailer with a transportation cost. In this paper, for the above system, we first derive the total cost function per unit time. Further, we obtain the conditions under which the total cost function is convex. Finally, we obtain the optimal time interval between any two consecutive orders as well as the optimal average inventory for each retailer.
Cost evaluation of a two-echelon inventory system with lost sales and non-identical retailers
2010
The inventory system under consideration consists of one central warehouse and an arbitrary number of non-identical retailers controlled by continuous review policy(R,Q). It is assumed Independent Poisson demands with constant transportation times for the retailers and constant lead time for replenishing orders from an external supplier for the warehouse. Unsatisfied demands are assumed lost at the retailers and unsatisfied retailer orders are backordered at the warehouse. An approximate cost function is developed to find optimal reorder points for given batch sizes in all installations and the related accuracy is assessed through simulation. The proposed method is an extension to the approximate assumption of Poisson demand on the warehouse previously and adds more approximations to tackle retailer's lead time complexity.
Continuous Review Two-Echelon (s,S) Inventory System with Partial Backlogging
International journal of fuzzy mathematical archive, 2018
Inventories exist throughout the supply chain in various forms for various reasons. This paper presents a continuous review two echelon inventory system. The operating policy at the lower echelon is (s, S) that is whenever the inventory level traps to s on order for Q = (S-s) items is placed, the ordered items are received after a random time which is distributed as exponential. We assume that the demands accruing during the stock-out period are partially backlogged. The retailer replenishes their stock from the regular supplier which adopts (0,M) policy, M = n 1 Q. When the regular supplier stock is empty the replacement of retailer stock made by the outside supplier who adopts (0,N) policy N = n 2 Q. The joint probability disruption of the inventory levels of retailer, regular supplier and the outside supplier are obtained in the steady state case. Various system performance measures are derived and the long run total expected inventory cost rate is calculated. Several instances of numerical examples, which provide insight into the behavior of the system are presented.
Modelling and Analysis of Compliment Inventory System in Supply Chain with Partial Backlogging
International Journal of Fuzzy Mathematical Archive
This paper presents a continuous review two echelon inventory systems with two different items in stock, one is main product and other one is complement item for the main product. The operating policy at the lower echelon for the main product is (s, S) that is whenever the inventory level drops to ‘s’ on order for Q = (S-s) items is placed, the ordered items are received after a random time which is distributed as exponential. We assume that the demands accruing during the stock-out period are partially backlogged. The retailer replenishes the stock of main product from the supplier which adopts (0,M) policy. The complement product is replenished instantaneously from local supplier. The joint probability disruption of the inventory levels of main product, complement item at retailer and the main product at supplier are obtained in the steady state case. Various system performance measures are derived and the long run total expected inventory cost rate is calculated. Several instance...