Evaluation of Installation Stock Based (R, Q)-Policies Fortwo-Level Inventory Systems with Poisson Demands

Authors:
Gonzalo Cortazar;Eduardo S. Schwartz;Marcelo Salinas;James E. Smith;Sven Axsater
Affiliations:
-;-;-;-;-
Venue:
Operations Research
Year:
1998

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Abstract

We consider a two-level inventory system with one warehouse and N retailers. Leadtimes (transportation times) are constant, and the retailers face different Poisson demand processes. All facilities apply continuous review installation stock (R, Q)-policies with different reorder points and batch quantities. We show how to evaluate holding and shortage costs exactly in case of two retailers. In case of more than two retailers we use the same methodology as an approximation. When evaluating costs at a certain retailer, the other retailers are then aggregated into a single retailer.