IDEAS home Printed from https://ideas.repec.org/p/tin/wpaper/19970094.html
   My bibliography  Save this paper

Using Break Quantities for Tactical Optimisation in Multistage Distribution Systems

Author

Listed:
  • Marcel J. Kleijn
  • Rommert Dekker

    (Econometric Institute, Erasmus University Rotterdam)

Abstract

In this chapter we discuss a tactical optimisation problem that arises in a multistage distribution system where customer orders can be delivered from any stockpoint. A simple rule to allocate orders to locations is a break quantity rule, which routes large orders to higher-stage stockpoints and small orders to end-stockpoints. A so-called break quantity determines whether an order is small or large. We present a qualitative discussion on the implications of this rule for the marketing process, and a qualitative and quantitative analysis on the implications for the transportation and inventory costs. Furthermore, wepresent a case study for a company that implemented a break quantity rule. Finally, in the last section the main results are summarised.

Suggested Citation

  • Marcel J. Kleijn & Rommert Dekker, 1997. "Using Break Quantities for Tactical Optimisation in Multistage Distribution Systems," Tinbergen Institute Discussion Papers 97-094/4, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:19970094
    as

    Download full text from publisher

    File URL: https://papers.tinbergen.nl/97094.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. de Kok, T. & Janssen, F.B.S.L.P., 1996. "Demand management in Multi-Stage Distribution Chain," Discussion Paper 1996-39, Tilburg University, Center for Economic Research.
    2. Gary D. Eppen, 1979. "Note--Effects of Centralization on Expected Costs in a Multi-Location Newsboy Problem," Management Science, INFORMS, vol. 25(5), pages 498-501, May.
    3. Dekker, R. & Frenk, J.B.G. & Kleijn, M.J. & de Kok, A.G., 1997. "On the newsboy model with a cutoff transaction size," Econometric Institute Research Papers EI 9736/A, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    4. de Kok, T. & Janssen, F.B.S.L.P., 1996. "Demand management in Multi-Stage Distribution Chain," Other publications TiSEM 653616d2-e230-4bef-9566-8, Tilburg University, School of Economics and Management.
    5. Fleischmann, Bernhard, 1993. "Designing distribution systems with transport economies of scale," European Journal of Operational Research, Elsevier, vol. 70(1), pages 31-42, October.
    6. V. Kasturi Rangan & Ramchandran Jaikumar, 1991. "Integrating Distribution Strategy and Tactics: A Model and an Application," Management Science, INFORMS, vol. 37(11), pages 1377-1389, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. R. Dekker & J.B.G. Frenk & M.J. Kleijn & A.G. de Kok, 1997. "On the Newsboy Model with a Cutoff Transaction Size," Tinbergen Institute Discussion Papers 97-113/4, Tinbergen Institute.
    2. Krever, Maarten & Wunderink, Sophia & Dekker, Rommert & Schorr, Benno, 2005. "Inventory control based on advanced probability theory, an application," European Journal of Operational Research, Elsevier, vol. 162(2), pages 342-358, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bernhard Fleischmann, 2016. "The impact of the number of parallel warehouses on total inventory," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 38(4), pages 899-920, October.
    2. Dekker, R. & Kleijn, M. J. & de Kok, A. G., 1998. "The break quantity rule's effect on inventory costs in a 1-warehouse, N-retailers distribution system," International Journal of Production Economics, Elsevier, vol. 56(1), pages 61-68, September.
    3. Jan A. Van Mieghem & Nils Rudi, 2002. "Newsvendor Networks: Inventory Management and Capacity Investment with Discretionary Activities," Manufacturing & Service Operations Management, INFORMS, vol. 4(4), pages 313-335, August.
    4. Ho-Yin Mak & Zuo-Jun Max Shen, 2014. "Pooling and Dependence of Demand and Yield in Multiple-Location Inventory Systems," Manufacturing & Service Operations Management, INFORMS, vol. 16(2), pages 263-269, May.
    5. Jiri Chod & Nils Rudi, 2005. "Resource Flexibility with Responsive Pricing," Operations Research, INFORMS, vol. 53(3), pages 532-548, June.
    6. Kim, Nayeon & Montreuil, Benoit & Klibi, Walid & Zied Babai, M., 2023. "Network inventory deployment for responsive fulfillment," International Journal of Production Economics, Elsevier, vol. 255(C).
    7. Congdong Li & Hao Guo & Ying Zhang & Shuai Deng & Yu Wang, 2018. "An Improved Differential Evolution Algorithm for a Multicommodity Location-Inventory Problem with False Failure Returns," Complexity, Hindawi, vol. 2018, pages 1-13, October.
    8. P. Escalona & F. Ordóñez & I. Kauak, 2017. "Critical level rationing in inventory systems with continuously distributed demand," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 39(1), pages 273-301, January.
    9. Anil Arya & Hans Frimor & Brian Mittendorf, 2015. "Decentralized Procurement in Light of Strategic Inventories," Management Science, INFORMS, vol. 61(3), pages 578-585, March.
    10. Charles J. Corbett & Kumar Rajaram, 2006. "A Generalization of the Inventory Pooling Effect to Nonnormal Dependent Demand," Manufacturing & Service Operations Management, INFORMS, vol. 8(4), pages 351-358, August.
    11. Muller, Alfred & Scarsini, Marco & Shaked, Moshe, 2002. "The Newsvendor Game Has a Nonempty Core," Games and Economic Behavior, Elsevier, vol. 38(1), pages 118-126, January.
    12. Zhang, Ying & Snyder, Lawrence V. & Qi, Mingyao & Miao, Lixin, 2016. "A heterogeneous reliable location model with risk pooling under supply disruptions," Transportation Research Part B: Methodological, Elsevier, vol. 83(C), pages 151-178.
    13. Taylor Randall & Serguei Netessine & Nils Rudi, 2006. "An Empirical Examination of the Decision to Invest in Fulfillment Capabilities: A Study of Internet Retailers," Management Science, INFORMS, vol. 52(4), pages 567-580, April.
    14. Mahar, Stephen & Bretthauer, Kurt M. & Venkataramanan, M.A., 2009. "The value of virtual pooling in dual sales channel supply chains," European Journal of Operational Research, Elsevier, vol. 192(2), pages 561-575, January.
    15. Hillier, Mark S., 2002. "Using commonality as backup safety stock," European Journal of Operational Research, Elsevier, vol. 136(2), pages 353-365, January.
    16. Ravi Anupindi & Yehuda Bassok, 1999. "Centralization of Stocks: Retailers vs. Manufacturer," Management Science, INFORMS, vol. 45(2), pages 178-191, February.
    17. H. Edwin Romeijn & Dolores Romero Morales, 2003. "An asymptotically optimal greedy heuristic for the multiperiod single‐sourcing problem: The cyclic case," Naval Research Logistics (NRL), John Wiley & Sons, vol. 50(5), pages 412-437, August.
    18. Alfaro, José A. & Corbett, Charles J., 2000. "The value of SKU rationalization: the pooling effect under suboptimal inventory policies," DEE - Working Papers. Business Economics. WB 9917, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.
    19. Özen, Ulas & Norde, Henk & Slikker, Marco, 2011. "On the convexity of newsvendor games," International Journal of Production Economics, Elsevier, vol. 133(1), pages 35-42, September.
    20. Sodero, Annibal C. & Namin, Aidin & Gauri, Dinesh K. & Bhaskaran, Sreekumar R., 2021. "The strategic drivers of drop-shipping and retail store sales for seasonal products," Journal of Retailing, Elsevier, vol. 97(4), pages 561-581.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tin:wpaper:19970094. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tinbergen Office +31 (0)10-4088900 (email available below). General contact details of provider: https://edirc.repec.org/data/tinbenl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.