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Multi-Item, One-Warehouse, Multi-Retailer Distribution Systems

Author

Listed:
  • John A. Muckstadt

    (School of Operations Research and Industrial Engineering, Cornell University, Ithaca, New York 14853)

  • Robin O. Roundy

    (School of Operations Research and Industrial Engineering, Cornell University, Ithaca, New York 14853)

Abstract

In this paper we study the problem of coordinating the purchase and shipment of I items in a one-warehouse, N-retailer inventory system. The model includes positive echelon holding costs, fixed costs for ordering and shipping each item, and a fixed joint item order cost at each retailer. Demand for each item at each retailer is assumed to occur at a constant and continuous rate. A mathematical model is developed based on these assumptions and the assumption that a stationary nested policy is followed. An efficient algorithm is presented based on the problem's structure that involves only sorting and runs in O(NI log NI) time. The cost of the policy computed is proven to be within 6% of the cost of an optimal nested policy. An example is presented to illustrate the problem structure and the proposed algorithm.

Suggested Citation

  • John A. Muckstadt & Robin O. Roundy, 1987. "Multi-Item, One-Warehouse, Multi-Retailer Distribution Systems," Management Science, INFORMS, vol. 33(12), pages 1613-1621, December.
    • Handle: RePEc:inm:ormnsc:v:33:y:1987:i:12:p:1613-1621
    DOI: 10.1287/mnsc.33.12.1613
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    Citations

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    Cited by:

    1. Eynan, Amit & Kropp, Dean H., 2007. "Effective and simple EOQ-like solutions for stochastic demand periodic review systems," European Journal of Operational Research, Elsevier, vol. 180(3), pages 1135-1143, August.
    2. Iara Ciurria-Infosino & Daniel Granot & Frieda Granot & Arthur F. Veinott, 2015. "Multicommodity Production Planning: Qualitative Analysis and Applications," Manufacturing & Service Operations Management, INFORMS, vol. 17(4), pages 589-607, October.
    3. Guerrero, W.J. & Yeung, T.G. & Guéret, C., 2013. "Joint-optimization of inventory policies on a multi-product multi-echelon pharmaceutical system with batching and ordering constraints," European Journal of Operational Research, Elsevier, vol. 231(1), pages 98-108.
    4. Erenguc, S. Selcuk & Simpson, N. C. & Vakharia, Asoo J., 1999. "Integrated production/distribution planning in supply chains: An invited review," European Journal of Operational Research, Elsevier, vol. 115(2), pages 219-236, June.
    5. Ali Diabat & Jean-Philippe Richard & Craig Codrington, 2013. "A Lagrangian relaxation approach to simultaneous strategic and tactical planning in supply chain design," Annals of Operations Research, Springer, vol. 203(1), pages 55-80, March.
    6. Shiman Ding & Philip M. Kaminsky, 2020. "Centralized and Decentralized Warehouse Logistics Collaboration," Manufacturing & Service Operations Management, INFORMS, vol. 22(4), pages 812-831, July.
    7. Adeinat, Hamza & Pazhani, Subramanian & Mendoza, Abraham & Ventura, Jose A., 2022. "Coordination of pricing and inventory replenishment decisions in a supply chain with multiple geographically dispersed retailers," International Journal of Production Economics, Elsevier, vol. 248(C).
    8. Qinan Wang, 2001. "Coordinating Independent Buyers in a Distribution System to Increase a Vendor's Profits," Manufacturing & Service Operations Management, INFORMS, vol. 3(4), pages 337-348, May.
    9. Tamar Cohen-Hillel & Liron Yedidsion, 2018. "The Periodic Joint Replenishment Problem Is Strongly 𝒩𝒫-Hard," Mathematics of Operations Research, INFORMS, vol. 43(4), pages 1269-1289, November.
    10. Wang, Qinan & Chay, Yiowmin & Wu, Zhang, 2011. "Streamlining inventory flows with time discounts to improve the profits of a decentralized supply chain," International Journal of Production Economics, Elsevier, vol. 132(2), pages 230-239, August.
    11. Yang, P. C. & Wee, H. M., 2002. "A single-vendor and multiple-buyers production-inventory policy for a deteriorating item," European Journal of Operational Research, Elsevier, vol. 143(3), pages 570-581, December.

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