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- Title
OPTIMAL POLICIES FOR A MULTI-ECHELON INVENTORY PROBLEM WITH PERIODIC ORDERING.
- Authors
Tan, Felipe K.
- Abstract
A central warehouse supplies two facilities with a product. The facilities are subject in each time period to stochastic demands. The warehouse can allocate stock to the facilities in each period, but can reorder from an exogenous source only after every T periods. Assuming convex holding and shortage costs, linear ordering and allocation costs, backlogging and no transshipment between facilities, the optimal ordering and allocation policies are characterized. It is also shown that after the last ordering instant, the optimal allocation policy reduces to a much simpler form when the costfunctions are separable in their variables, and that results on the zero time lag allocation problem apply to the fixed time lag case when the holding and shortage costs are functions only of the facility inventories and the total system inventory.
- Subjects
WAREHOUSE management; INVENTORY shortages; INVENTORIES; BUSINESS logistics; ORDER picking systems; WAREHOUSES; SUPPLIERS; HOLDING cost; INVENTORY control; MANAGEMENT science
- Publication
Management Science, 1974, Vol 20, Issue 7, p1104
- ISSN
0025-1909
- Publication type
Article
- DOI
10.1287/mnsc.20.7.1104