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Service Level Relationships in a Multi-Echelon Inventory System

Author

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  • Barbara Amdur Rosenbaum

    (Eastman Kodak Company)

Abstract

This paper deals with a multi-echelon inventory system consisting of one central Distribution Center (DC) which is the source of supply for any number of Regional Distribution Centers (RDC's) which are the source of supply for customer demand. It develops and tests through the use of simulation a heuristic for determining what level of service the customer receives given any combination of DC and RDC service levels, where service is defined as the fraction of demand met from on-hand inventory at the location where the order is placed. A number of different combinations of DC and RDC service level will achieve any given level of customer service. The criterion used to identify the best combination is the minimization of the average level of total system inventory.

Suggested Citation

  • Barbara Amdur Rosenbaum, 1981. "Service Level Relationships in a Multi-Echelon Inventory System," Management Science, INFORMS, vol. 27(8), pages 926-945, August.
    • Handle: RePEc:inm:ormnsc:v:27:y:1981:i:8:p:926-945
    DOI: 10.1287/mnsc.27.8.926
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    Cited by:

    1. de Kok, Ton & Grob, Christopher & Laumanns, Marco & Minner, Stefan & Rambau, Jörg & Schade, Konrad, 2018. "A typology and literature review on stochastic multi-echelon inventory models," European Journal of Operational Research, Elsevier, vol. 269(3), pages 955-983.
    2. Noordhoek, Marije & Dullaert, Wout & Lai, David S.W. & de Leeuw, Sander, 2018. "A simulation–optimization approach for a service-constrained multi-echelon distribution network," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 114(C), pages 292-311.
    3. Stenger, Alan J., 1996. "Reducing inventories in a multi-echelon manufacturing firm A case study," International Journal of Production Economics, Elsevier, vol. 45(1-3), pages 239-249, August.
    4. Gérard P. Cachon, 2001. "Exact Evaluation of Batch-Ordering Inventory Policies in Two-Echelon Supply Chains with Periodic Review," Operations Research, INFORMS, vol. 49(1), pages 79-98, February.
    5. Ahire, Sanjay L. & Schmidt, Charles P., 1996. "A model for a Mixed Continuous-Periodic Review One-Warehouse, N-Retailer inventory system," European Journal of Operational Research, Elsevier, vol. 92(1), pages 69-82, July.
    6. Diks, E. B. & de Kok, A. G. & Lagodimos, A. G., 1996. "Multi-echelon systems: A service measure perspective," European Journal of Operational Research, Elsevier, vol. 95(2), pages 241-263, December.

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