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The stochastic joint replenishment problem: A new policy, analysis, and insights

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  • Banu Yüksel Özkaya
  • Ülkü Gürler
  • Emre Berk

Abstract

In this study, we propose a new parsimonious policy for the stochastic joint replenishment problem in a single‐location, N‐item setting. The replenishment decisions are based on both group reorder point‐group order quantity and the time since the last decision epoch. We derive the expressions for the key operating characteristics of the inventory system for both unit and compound Poisson demands. In a comprehensive numerical study, we compare the performance of the proposed policy with that of existing ones over a standard test bed. Our numerical results indicate that the proposed policy dominates the existing ones in 100 of 139 instances with comparably significant savings for unit demands. With batch demands, the savings increase as the stochasticity of demand size gets larger. We also observe that it performs well in environments with low demand diversity across items. The inventory system herein also models a two‐echelon setting with a single item, multiple retailers, and cross docking at the upper echelon. © 2006 Wiley Periodicals, Inc. Naval Research Logistics, 2006

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  • Banu Yüksel Özkaya & Ülkü Gürler & Emre Berk, 2006. "The stochastic joint replenishment problem: A new policy, analysis, and insights," Naval Research Logistics (NRL), John Wiley & Sons, vol. 53(6), pages 525-546, September.
    • Handle: RePEc:wly:navres:v:53:y:2006:i:6:p:525-546
    DOI: 10.1002/nav.20147
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    1. Larsen, Christian, 2019. "A heuristic joint replinishment policy for the case of heterogeneity among items," International Journal of Production Economics, Elsevier, vol. 209(C), pages 164-171.

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