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Integrated Inventory Replenishment and Temporal Shipment Consolidation: A Comparison of Quantity-Based and Time-Based Models

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  • Frank Chen
  • Tong Wang
  • Tommy Xu

Abstract

In this paper we present two models for joint stock replenishment and shipment consolidation decisions which arise in the context of vendor managed inventory. Stock replenishment from suppliers or shipment to customers each incurs a lump-sum cost to the vendor. We assume the vendor uses the reorder point, lot-size policy to replenish stock and one of two schemes to dispatch shipment: the time-based and quantity-based consolidation schemes. Under the time-based (quantity-based) scheme, a shipment is dispatched periodically (when a certain quantity of outstanding demand is accumulated). The basic finding is that the quantity-based scheme can outperform the time-based counterpart while the reverse never occurs. Copyright Springer Science + Business Media, Inc. 2005

Suggested Citation

  • Frank Chen & Tong Wang & Tommy Xu, 2005. "Integrated Inventory Replenishment and Temporal Shipment Consolidation: A Comparison of Quantity-Based and Time-Based Models," Annals of Operations Research, Springer, vol. 135(1), pages 197-210, March.
    • Handle: RePEc:spr:annopr:v:135:y:2005:i:1:p:197-210:10.1007/s10479-005-6241-9
    DOI: 10.1007/s10479-005-6241-9
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    References listed on IDEAS

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    Cited by:

    1. Chen, Jing & Dong, Ming & Xu, Lei, 2018. "A perishable product shipment consolidation model considering freshness-keeping effort," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 115(C), pages 56-86.
    2. Kyunghoon Kang & Ki-sung Hong & Ki Hong Kim & Chulung Lee, 2017. "Shipment Consolidation Policy under Uncertainty of Customer Order for Sustainable Supply Chain Management," Sustainability, MDPI, vol. 9(9), pages 1-17, September.
    3. Hong, Ki-sung & Lee, Chulung, 2013. "Optimal time-based consolidation policy with price sensitive demand," International Journal of Production Economics, Elsevier, vol. 143(2), pages 275-284.
    4. Jana Ralfs & Gudrun P. Kiesmüller, 2022. "Inventory management with advance demand information and flexible shipment consolidation," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 44(4), pages 1009-1044, December.
    5. Stenius, Olof & Marklund, Johan & Axsäter, Sven, 2018. "Sustainable multi-echelon inventory control with shipment consolidation and volume dependent freight costs," European Journal of Operational Research, Elsevier, vol. 267(3), pages 904-916.
    6. Kang, Jae-Hun & Kim, Yeong-Dae, 2010. "Coordination of inventory and transportation managements in a two-level supply chain," International Journal of Production Economics, Elsevier, vol. 123(1), pages 137-145, January.
    7. Southard, Peter B. & Swenseth, Scott R., 2008. "Evaluating vendor-managed inventory (VMI) in non-traditional environments using simulation," International Journal of Production Economics, Elsevier, vol. 116(2), pages 275-287, December.
    8. Christine Nguyen & Alejandro Toriello & Maged Dessouky & James E. Moore, 2013. "Evaluation of Transportation Practices in the California Cut Flower Industry," Interfaces, INFORMS, vol. 43(2), pages 182-193, April.
    9. Sonntag, Danja R. & Schrotenboer, Albert H. & Kiesmüller, Gudrun P., 2023. "Stochastic inventory routing with time-based shipment consolidation," European Journal of Operational Research, Elsevier, vol. 306(3), pages 1186-1201.

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