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A Staggered Ordering Policy for One-Warehouse, Multiretailer Systems

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  • Fangruo Chen

    (Graduate School of Business, Columbia University, New York, New York 10027)

  • Rungson Samroengraja

    (Booz, Allen & Hamilton Inc., 101 Park Avenue, New York, NY 10178)

Abstract

We consider a one-warehouse, N -identical-retailer model. Random demands occur at the retailers with complete backlogging. The retailers replenish their inventories from the warehouse, which in turn orders from an outside supplier with unlimited stock. Each retailer places an order every N periods according to a base-stock policy, and the reorder intervals of the retailers are staggered so that only one retailer places an order in each period. The warehouse orders according to an ( s, S ) policy based on its own inventory position. We consider two allocation policies, past priority allocation (PPA) and current priority allocation (CPA), which specify how the retailer orders are filled at the warehouse. For the PPA model, we provide an exact procedure for computing the long-run average total cost. Based on the exact procedure, we develop an approximate model that can be used to determine near-optimal control parameters for both the PPA and the CPA model. We conduct a computational study to test the effectiveness of the approximate model and to compare the performance of the two allocation policies.

Suggested Citation

  • Fangruo Chen & Rungson Samroengraja, 2000. "A Staggered Ordering Policy for One-Warehouse, Multiretailer Systems," Operations Research, INFORMS, vol. 48(2), pages 281-293, April.
    • Handle: RePEc:inm:oropre:v:48:y:2000:i:2:p:281-293
    DOI: 10.1287/opre.48.2.281.12387
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    References listed on IDEAS

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    Cited by:

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    3. Fangruo Chen & Rungson Samroengraja, 2004. "Order Volatility and Supply Chain Costs," Operations Research, INFORMS, vol. 52(5), pages 707-722, October.
    4. Saif Benjaafar & David Chen & Rowan Wang, 2017. "Managing Production-Inventory Systems with Scarce Resources," Manufacturing & Service Operations Management, INFORMS, vol. 19(2), pages 216-229, May.
    5. Johan Marklund, 2006. "Controlling Inventories in Divergent Supply Chains with Advance-Order Information," Operations Research, INFORMS, vol. 54(5), pages 988-1010, October.
    6. Leon Yang Chu & Zuo-Jun Max Shen, 2010. "A Power-of-Two Ordering Policy for One-Warehouse Multiretailer Systems with Stochastic Demand," Operations Research, INFORMS, vol. 58(2), pages 492-502, April.
    7. repec:dau:papers:123456789/522 is not listed on IDEAS
    8. Lee, Dong Joo & Jeong, In-Jae, 2010. "A distributed coordination for a single warehouse-multiple retailer problem under private information," International Journal of Production Economics, Elsevier, vol. 125(1), pages 190-199, May.
    9. Sheng Hao Zhang & Ki Ling Cheung, 2008. "Note--Replenishment Sequencing in a Supply Chain with Balanced Ordering," Manufacturing & Service Operations Management, INFORMS, vol. 10(2), pages 198-203, March.

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