Heuristic Coordination of Decentralized Inventory Systems Using Induced Backorder Costs

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12 Citations (SciVal)

Abstract

In this paper, we investigate a one-warehouse multiple-retailer system, where the inventory control decisions are coordinated using a near optimal induced backorder cost, β*. All installations use continuous review installation-stock (R, Q) policies. The analysis builds on an approximation model where the stochastic warehouse delays are replaced by their correct averages. The contributions include insights as to how β* is influenced by system parameters, and the determination of simple closed form β* estimates. The latter offering a practical means to achieve coordinated control of large size systems.
Original languageEnglish
Pages (from-to)294-310
JournalProduction and Operations Management
Volume15
Issue number2
Publication statusPublished - 2006

Subject classification (UKÄ)

  • Transport Systems and Logistics

Keywords

  • Inventory control
  • Coordination
  • Studies
  • Heuristic
  • Supply chains

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