Managing supply chain inventories: A multiple retailer, one warehouse, multiple supplier model

Managing supply chain inventories: A multiple retailer, one warehouse, multiple supplier model

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Article ID: iaor20001356
Country: Netherlands
Volume: 59
Issue: 1/3
Start Page Number: 341
End Page Number: 354
Publication Date: Mar 1999
Journal: International Journal of Production Economics
Authors:
Keywords: supply chain
Abstract:

Inventories exist throughout the supply chain in various forms for various reasons. Since carrying these inventories can cost anywhere from 20 to 40% of their value a year, managing them in a scientific manner to maintain minimal levels makes economic sense. This paper presents a near-optimal (s,Q)-type inventory policy for a production/distribution network with multiple suppliers replenishing a central warehouse, which in turn distributes to a large number of retailers. The model is a synthesis of three components: (i) the inventory analysis at the retailers, (ii) the demand process at the warehouse, and (iii) the inventory analysis at the warehouse. The key contribution of the model is the seamless integration of the three components to analyze simple supply chains. The decisions in the model were made through a comprehensive distribution-based cost framework that includes the inventory, transportation, and transit components of the supply chain.

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