Safety stock optimisation in distribution systems: a comparison of two competing approaches

Safety stock optimisation in distribution systems: a comparison of two competing approaches

0.00 Avg rating0 Votes
Article ID: iaor20105531
Volume: 13
Issue: 2
Start Page Number: 99
End Page Number: 120
Publication Date: Apr 2010
Journal: International Journal of Logistics Research and Applications
Authors: ,
Keywords: distribution, simulation: applications
Abstract:

Contributions to multi-echelon safety stock optimisation can broadly be divided into models following either a stochastic- or guaranteed-service approach. These approaches form the basis of several commercial inventory optimisation software tools. To date, there is still a lack of a detailed comparison between the two approaches. This paper presents a cost comparison for two-stage distribution systems by means of a simulation study. The results indicate that the cost difference between the two approaches is quite small amounting to 4% at most. We observe that in most cases, the resulting (lower) internal warehouse service level is a good indicator for the superiority of an approach. The guaranteed-service approach shows a better performance for moderate flexibility costs, large warehouse processing times and high retailer service levels.

Reviews

Required fields are marked *. Your email address will not be published.