OPTIMAL INVENTORY POLICIES FOR THE ONE WAREHOUSE, N-RETAILER SYSTEM
Abstract
This research examines an inventory system consisting of one warehouse and N identical retailers. It is assumed that each facility in the system operates a continuous review (Q, R) replenishment policy, that all unmet demand is backordered, that the transportation lead times between the warehouse and its supplier and between the warehouse and the retailers are fixed, and that each retailer faces independent, unit Poisson demand. Furthermore, the retailers are identical in terms of lead time, demand rate, lot size, and reorder points. The model of the system which is used in this study is the Deuermeyer-Schwarz model. Within the context of this model, the optimal allocation of safety stock among the warehouse and retailers is determined subject to a constraint on the total amount of safety stock in the system. This optimization is carried out under two different objective functions: fill-rate and expected backorders. The results of this study are general statements about the form of these optimal policies, the characterization of the locus of optimal safety stock positions for all finite values of the constraint as a policy line in the two-dimensional policy space, insights into the effects of safety stocks in this system, and a highly accurate and simple heuristic for computing optimal safety stock positions.
Degree
Ph.D.
Subject Area
Management
Off-Campus Purdue Users:
To access this dissertation, please log in to our
proxy server.