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Optimization of order‐up‐to‐s policies in two‐echelon inventory systems with periodic review

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  • Sven Axsäter

Abstract

We consider an inventory system with one warehouse and N retailers. Transportation times are constant and the retailers face independent Poisson demand. Each facility applies a periodic review order‐up‐to‐S policy. In case of shortages at the warehouse, orders for individual units are filled in the same order as the original demand at the retailers, i.e., according to a so‐called virtual allocation scheme. Using that the considered policy is very similar to a continuous review one‐for‐one ordering policy, we are able to provide simple recursive procedures for exact evaluation of holding and shortage costs. © 1993 John Wiley & Sons, Inc.

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  • Sven Axsäter, 1993. "Optimization of order‐up‐to‐s policies in two‐echelon inventory systems with periodic review," Naval Research Logistics (NRL), John Wiley & Sons, vol. 40(2), pages 245-253, March.
    • Handle: RePEc:wly:navres:v:40:y:1993:i:2:p:245-253
    DOI: 10.1002/1520-6750(199303)40:23.0.CO;2-M
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    1. Awi Federgruen & Paul Zipkin, 1984. "Allocation policies and cost approximations for multilocation inventory systems," Naval Research Logistics Quarterly, John Wiley & Sons, vol. 31(1), pages 97-129, March.
    2. Awi Federgruen & Paul Zipkin, 1984. "Computational Issues in an Infinite-Horizon, Multiechelon Inventory Model," Operations Research, INFORMS, vol. 32(4), pages 818-836, August.
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