Stock Allocation in a Two-Echelon Distribution System Or “What to Do Until Your Ship Comes In”
Management Science · 1988 · Volume 34 · Issue 7
Abstract
In this paper, we focus on a single order cycle of a warehouse, serving N retailers where the only shipments allowed during the cycle are from the warehouse to the retailers. For a simple ship-up-to- S allocation policy, we develop both the exact cost model and a computationally tractable approximate cost model for the case of identical retailers, and demonstrate empirically the benefits of centralizing at least a portion of the total system stock.
Keywords
inventory/production, approximations, multi-echelon, issuing policies, simulations
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