Stochastic joint replenishment problem : a new policy and analysis for single location and two eclehon inventory systems

Abstract

In this study we examine replenishment coordination strategies for multiple item or multiple location inventory systems In particular we propose a new parsimonious control policy for the stochastic joint replenishment problem We rst study the single location setting with multiple items under this policy An extensive numerical study indicates that the proposed policy achieves signi cant cost improvements in comparison with the existing policies The single location model also represents a two echelon supply chain for a single item with multiple locations where the upper echelon employs cross docking We then extend our model to incorporate multi location settings where the upper echelon also holds inventory Our modeling methodology based on the development of the ordering process by the lower echelon provides an analytical tool to investigate various joint replenishment policies An extensive numerical study is conducted to determine the performance of the system and identify regions of dominance across policies Keywords S