A Power-of-Two Ordering Policy for One-Warehouse Multiretailer Systems with Stochastic Demand

• 成果类型: Article
• 署名作者: Chu, Leon Yang; Shen, Zuo-Jun Max
• 署名单位: University of Southern California; University of California System; University of California Berkeley
• 刊物名称: OPERATIONS RESEARCH
• ISSN/ISSBN: 0030-364X
• DOI: 10.1287/opre.1090.0707
• 发表日期: 2010
• 页码: 492-502
• 关键词: inventory control-models; Approximation algorithms; Supply chains; MULTIECHELON; INFORMATION; allocation

摘要

We study a two-echelon supply chain with one warehouse and N (nonidentical) retailers facing stochastic demand. An easy-to-implement inventory policy, the so-called power-of-two (POT) policy, is proposed to manage inventory for the system. To maintain a certain service level, safety stocks are kept at the warehouse and each retailer outlet to buffer random demand. Our analysis highlights the important role of the warehouse safety stock level, which, in addition to the length of the warehouse order interval, significantly affects the lengths of the retailers' order intervals. By combining the length of the warehouse order interval with the warehouse safety stock level, we introduce a plane partition method and develop a polynomial time algorithm to find a POT policy for arbitrary target service levels. The long-run average cost of the proposed POT policy is guaranteed to be no more than 1.26 times the optimal POT policy cost. We also show that our proposed policy can be computed in O (N(3)).