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On the effect of inventory policies on distribution network design with several demand classes

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  • Escalona, P.
  • Marianov, V.
  • Ordóñez, F.
  • Stegmaier, R.

Abstract

This paper studies the effect of several inventory policies on the design of a distribution network for fast-moving items able to provide differentiated service levels in terms of product availability for several demand classes. We consider the distribution network design problem when the global round-up, single class allocation, local separate stock, local round-up, and critical level inventory policies are used. We show how to formulate these problems as conic quadratic mixed-integer problems and prove that the critical level policy provides the lowest cost distribution network design. Further results and a computational study show how these different models compare in practice.

Suggested Citation

  • Escalona, P. & Marianov, V. & Ordóñez, F. & Stegmaier, R., 2018. "On the effect of inventory policies on distribution network design with several demand classes," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 111(C), pages 229-240.
    • Handle: RePEc:eee:transe:v:111:y:2018:i:c:p:229-240
    DOI: 10.1016/j.tre.2017.10.019
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    References listed on IDEAS

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