Optimization of Order-up-to-S Policies in Two-Echelon Inventory Systems with Periodic Review

Sven Axsäter

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Abstract in Undetermined
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.
Original languageEnglish
Pages (from-to)245-253
JournalNaval Research Logistics
Issue number2
Publication statusPublished - 1993

Subject classification (UKÄ)

  • Transport Systems and Logistics

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