New bounds and heuristics for (Q,r) policies

Article Abstract:

The impact of variations of demand on single item stochastic inventory systems with setup costs was examined. The distributional information on lead time demand was introduced into its mean and variance and the resulting problem was solved against the worst possible distribution in this group. A closed form distribution-free solution for Q and r, and upper bounds on the optimal long run average cost and on the optimal batch size were derived for (Q,r) policies. Also, a robust, distribution-free, batch-size heuristic that results in a relative rise in cost of a maximum of 6.07% was developed. Moreover, a sharper lower and upper limits on the long run average cost were achieved when the newsvendor cost is given. These bounds demonstrates how the cost affects fixed setup costs, demand variability and constraints on the batch size.

Inventory Control, Analysis, Stochastic processes

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Hierarchical planning for probabilistic distribution systems in Euclidian spaces

Article Abstract:

An analytical model is used to formulate probabilistic distribution systems. The probabilistic element that is examined concerns the demand for services of a limited segment of the customer population for any selected working day. The operational costs of these distribution systems are largely influenced by decisions concerning the demographics of distribution facilities, the apportionment of customers to every facility, and the routing schemes. To reduce cost for the system, a three-tiered hierarchical method combines the previously mentioned influential factors. The first phase involves the locations and number of facilities, followed by customer allocation, and finally the routing schemes.

Decision-making, Models, Decision making, Asymptotic distribution (Probability theory)

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On the effectiveness of direct shipping strategy for the one-warehouse multi-retailer R-sytems

Article Abstract:

A cost-effective method is proposed for addressing the challenge of integrating vehicle routing and inventory control in a distribution system made up of various geographically situated retailers and one depot. It is assumed that every retailer has specific, constant demand rate and that inventory is charged not at the depot but only at the retailers. A lower bound on the long run average cost over all inventory-routing methods is proposed to demonstrate that direct shipping is more effective than using strategies built around all-inventory routing. Research results suggest that benefits of direct shipping include ease of coordination and lower in-transit inventory.

Distribution channels

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