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Impact of demand uncertainty on coordinating supply chain inventories through common replenishment epochs

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  • Y Feng

    (Nanyang Technological University)

  • S Viswanathan

    (Nanyang Technological University)

Abstract

Prior studies have shown that inventories in a one vendor, multi-buyer supply chain with deterministic demands can be coordinated effectively through the use of common replenishment epochs (CRE). In this paper, we study the impact of demand uncertainty on the effectiveness of coordinating such a supply chain. We develop a model to analyse the coordination mechanism using CRE in a one-vendor, multi-buyer supply chain, when the demand faced by the buyers is stochastic. Our numerical study based on the model found that coordination through CRE may not always be beneficial when the demand variance is high. We also investigate a strategy of advance order processing by the vendor to improve the effectiveness of coordination through CRE.

Suggested Citation

  • Y Feng & S Viswanathan, 2007. "Impact of demand uncertainty on coordinating supply chain inventories through common replenishment epochs," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 58(7), pages 964-971, July.
    • Handle: RePEc:pal:jorsoc:v:58:y:2007:i:7:d:10.1057_palgrave.jors.2602219
    DOI: 10.1057/palgrave.jors.2602219
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    References listed on IDEAS

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    Cited by:

    1. B Desmet & E-H Aghezzaf & H Vanmaele, 2010. "A normal approximation model for safety stock optimization in a two-echelon distribution system," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 61(1), pages 156-163, January.
    2. Hsieh, Chung-Chi & Liu, Yu-Te & Wang, Wei-Ming, 2010. "Coordinating ordering and pricing decisions in a two-stage distribution system with price-sensitive demand through short-term discounting," European Journal of Operational Research, Elsevier, vol. 207(1), pages 142-151, November.

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