Abstract
This paper develops a METRIC-like method to optimize inventory allocations for low-demand items in a multi-echelon finished goods distribution system. The allocations are made by trading-off total inventory investment against service levels as measured by the stockout probabilities. We focus on a one-product three-echelon system and develop a solution procedure for such a system. We then apply that model and solution procedure to an illustrative example and compare the resulting inventory policies to optimal policies for a two-echelon system.
Preview
Unable to display preview. Download preview PDF.
Similar content being viewed by others
References
Muckstadt, J.A., Thomas, L.J.: Are Multi-Echelon Inventory Methods Worth Implementing in Systems with Low-Demand-Rate Items? Management Science 26, 483–494 (1980)
Hausman, W.H., Erkip, N.K.: Multi-echelon vs. Single-echelon Inventory Control Policies for Low-demand Items. Management Science 40, 597–602 (1994)
Nahmis, S.: Managing Repairable Item Inventory System: A Review. In: Schwarz, L. (ed.) Multi-level Production/Inventory Control Systems: Theory and Practice. North-Holland, New York (1981)
Axsater, S.: Continuous Review Policies for Multi-Level Inventory Systems with Stochastic Demand. In: Graves, S.C., Rinnooy Kan, A.H.G., Zipkin, P.H. (eds.) Logistic of Production and Inventory, Handbook in Operations Research and Management Science 4. Elsevier, North-Holland, Amsterdam (1993)
Diks, E.B., et al.: Multi-echelon Systems: A Service Measure Perspective. European Journal of Operational Research 95, 241–263 (1996)
Sherbrooke, C.C.: Optimal Inventory Modeling of Systems: Multi-Echelon Techniques. John Wiley, Sons, Inc., New York (1992)
Demmy, W.S., Pressuti, V.J.: Multi-Echelon Inventory Theory in the Air Force Logistics Command. In: Schwarz, L. (ed.) Multi-level Production/Inventory Control Systems: Theory and Practice. North-Holland, New York (1981)
Sherbrooke, C.C.: METRIC: A Multi-echelon Technique for Recoverable Inventory Control. Operation Research 16, 122–141 (1968)
Axsater, S.: Simple Solution Procedures for a Class of Two-Echelon Inventory Problems. Operations Research 38, 64–69 (1990)
Nozick, L.K., Turnquist, M.A.: A Two-echelon Inventory Allocation and Distribution Center Location Analysis. Transportation Research Part E 37, 425–441 (2001)
Feeney, G.J., Sherbrooke, C.C.: The (S-1,S) Inventory Policy under Compound Poisson Demand. Management Science 12, 391–411 (1966)
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2005 Springer-Verlag Berlin Heidelberg
About this paper
Cite this paper
Lin, JR., Nozick, L.K., Turnquist, M.A. (2005). Inventory Allocation with Multi-echelon Service Level Considerations. In: Gervasi, O., et al. Computational Science and Its Applications – ICCSA 2005. ICCSA 2005. Lecture Notes in Computer Science, vol 3483. Springer, Berlin, Heidelberg. https://doi.org/10.1007/11424925_53
Download citation
DOI: https://doi.org/10.1007/11424925_53
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-540-25863-6
Online ISBN: 978-3-540-32309-9
eBook Packages: Computer ScienceComputer Science (R0)