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A decomposition and coordination method for optimising (Q, S) policies in a two-echelon distribution system with joint replenishment.

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Title: A decomposition and coordination method for optimising (Q, S) policies in a two-echelon distribution system with joint replenishment.
Authors: Wang, Lei1 (AUTHOR), Chen, Haoxun1 (AUTHOR) haoxun.chen@utt.fr
Source: International Journal of Production Research. Jan2024, Vol. 62 Issue 1/2, p556-573. 18p.
Subjects: Decomposition method, Cost functions, Aggregate demand, Inventory control, Inventories, Perishable goods
Abstract: A continuous-review, two-echelon distribution system with one central distribution centre (CDC) and multiple regional distribution centres (RDCs) is studied. The CDC jointly replenishes its inventories of multiple items from an external supplier, while each RDC replenishes its inventories of the items from the CDC. Each RDC faces a Poisson demand for each item, and the inventories of each stock in the system are controlled by a (Q, S) policy. Under this policy, an order is placed by a stock whenever its aggregate demand since the last order reaches a given quantity, and the inventory position of each item is raised up to its order-up-to level after the order placement. The objective is to optimise these (Q, S) policies so that the expected total cost of this system is minimised. We propose a decomposition and coordination method for this optimisation after deriving analytically the cost function of the system. Our extensive numerical experiments demonstrate the effectiveness of the proposed method. Furthermore, a parameter sensitivity analysis is conducted to analyse the impacts of some key system parameters on the performance of the method, and managerial insights are provided for optimising distribution systems with joint replenishment and real applications of the method. [ABSTRACT FROM AUTHOR]
Copyright of International Journal of Production Research is the property of Taylor & Francis Ltd and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)
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  Data: A decomposition and coordination method for optimising (Q, S) policies in a two-echelon distribution system with joint replenishment.
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  Data: <searchLink fieldCode="DE" term="%22Decomposition+method%22">Decomposition method</searchLink><br /><searchLink fieldCode="DE" term="%22Cost+functions%22">Cost functions</searchLink><br /><searchLink fieldCode="DE" term="%22Aggregate+demand%22">Aggregate demand</searchLink><br /><searchLink fieldCode="DE" term="%22Inventory+control%22">Inventory control</searchLink><br /><searchLink fieldCode="DE" term="%22Inventories%22">Inventories</searchLink><br /><searchLink fieldCode="DE" term="%22Perishable+goods%22">Perishable goods</searchLink>
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  Label: Abstract
  Group: Ab
  Data: A continuous-review, two-echelon distribution system with one central distribution centre (CDC) and multiple regional distribution centres (RDCs) is studied. The CDC jointly replenishes its inventories of multiple items from an external supplier, while each RDC replenishes its inventories of the items from the CDC. Each RDC faces a Poisson demand for each item, and the inventories of each stock in the system are controlled by a (Q, S) policy. Under this policy, an order is placed by a stock whenever its aggregate demand since the last order reaches a given quantity, and the inventory position of each item is raised up to its order-up-to level after the order placement. The objective is to optimise these (Q, S) policies so that the expected total cost of this system is minimised. We propose a decomposition and coordination method for this optimisation after deriving analytically the cost function of the system. Our extensive numerical experiments demonstrate the effectiveness of the proposed method. Furthermore, a parameter sensitivity analysis is conducted to analyse the impacts of some key system parameters on the performance of the method, and managerial insights are provided for optimising distribution systems with joint replenishment and real applications of the method. [ABSTRACT FROM AUTHOR]
– Name: AbstractSuppliedCopyright
  Label:
  Group: Ab
  Data: <i>Copyright of International Journal of Production Research is the property of Taylor & Francis Ltd and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract.</i> (Copyright applies to all Abstracts.)
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        Value: 10.1080/00207543.2023.2276808
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      – Code: eng
        Text: English
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        Type: general
      – SubjectFull: Cost functions
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      – SubjectFull: Aggregate demand
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      – SubjectFull: Inventory control
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      – SubjectFull: Inventories
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      – SubjectFull: Perishable goods
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              Text: Jan2024
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