Article ID: | iaor19991595 |
Country: | Netherlands |
Volume: | 103 |
Issue: | 1 |
Start Page Number: | 117 |
End Page Number: | 128 |
Publication Date: | Nov 1997 |
Journal: | European Journal of Operational Research |
Authors: | Ernst Ricardo, Kamrad Bardia |
Keywords: | multi-echelon system |
This paper considers the problem of allocating warehouse inventory to retailers where retailer orders and the replenishment of warehouse inventory occur periodically on a fixed schedule. We assume that the warehouse and the retailers have the opportunity to exchange demand information through Electronic Data Interchange. At the warehouse level, for instance, the available information on the retailer's demand may be utilized in determining the shipment quantities needed to meet the desired service level to the retailers. Unlike similar models focusing primarily on optimizing systems wide performance measures, in this paper we focus on the service level furnished to the retailers by the warehouse. To this end, three different allocation policies are considered: static, myopic, and dynamic rules characterizing the impact of available demand information on the resulting service levels. Numerical illustrations exemplify the allocation rules considered. An interesting though counter intuitive observation is that the existence of additional demand information cannot, a priori, be assumed superior.