Multicriteria trade-offs in a warehouse/retailer system

Multiple Criteria Decision Making (MCDM) methodology is applied to a two-echelon serial inventory/distribution system, consisting of a warehouse and retailer. Different situations, such as deterministic and probabilistic demand, and whether marginal inventory costs are known, are discussed. Three non-linear multiobjective programming models and corresponding solution approaches are presented to obtain non-dominated inventory policies achieving trade-offs among objectives such as customer service, inventory investment and transportation cost. The present results are MCDM generalizations of Brown’s exchange curve, Starr and Miller’s optimal policy curve and Gardner and Dannenbring’s optimal policy surface.