Stochastic (Q,r) inventory model for two-echelon distribution system

This paper develops a two-echelon inventory model with time-weighted partial backorders. The model presented is assumed to follow a continuous review (Q,r) policy for both the retailer and the central warehouse under stochastic demand. A heuristic method to find an almost-optimum solution for total variable system cost per year incurred at the central warehouse and retailers in a system is suggested. To show the usefulness of the above model, numerical examples are illustrated for verification and validation purposes.