Controlling distribution inventory systems with shipment consolidation and compound Poisson demand
•Heuristics for controlling one-warehouse-multiple-retailer inventory systems.•Time based shipment consolidation and compound Poisson demand.•Single-item and multi-item methods for backorder cost and fillrate constraint models.•Numerical evaluation against existing exact results show near optimal pe...
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| Vydáno v: | European journal of operational research Ročník 280; číslo 1; s. 90 - 101 |
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| Médium: | Journal Article |
| Jazyk: | angličtina |
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Elsevier B.V
01.01.2020
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| ISSN: | 0377-2217, 1872-6860, 1872-6860 |
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| Abstract | •Heuristics for controlling one-warehouse-multiple-retailer inventory systems.•Time based shipment consolidation and compound Poisson demand.•Single-item and multi-item methods for backorder cost and fillrate constraint models.•Numerical evaluation against existing exact results show near optimal performance.•Practical applicability and impact illustrated using real company data.
We consider a one-warehouse-multiple-retailer inventory system where the retailers face stochastic customer demand, modelled as compound Poisson processes. Deliveries from the central warehouse to groups of retailers are consolidated using a time based shipment consolidation policy. This means that replenishment orders have to wait until a vehicle departures, which increases the lead time for the retailers and therefore also the safety stock. Thus, a trade-off exists between expected shipment costs and holding costs. Our aim is to determine the shipment intervals and the required amount of safety stock for each retailer and the warehouse to minimize total cost, both for backorder costs and fill rate constraints. Previous work has focused on exact solutions which are computationally demanding and not applicable for larger real world problems. The focus of our present work is on the development of computationally attractive heuristics that can be applied in practice. A numerical study shows that the proposed heuristics perform well compared to the exact cost minimizing solutions. We also illustrate that the approaches are appropriate for solving real world problems using data from a large European company. |
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| AbstractList | •Heuristics for controlling one-warehouse-multiple-retailer inventory systems.•Time based shipment consolidation and compound Poisson demand.•Single-item and multi-item methods for backorder cost and fillrate constraint models.•Numerical evaluation against existing exact results show near optimal performance.•Practical applicability and impact illustrated using real company data.
We consider a one-warehouse-multiple-retailer inventory system where the retailers face stochastic customer demand, modelled as compound Poisson processes. Deliveries from the central warehouse to groups of retailers are consolidated using a time based shipment consolidation policy. This means that replenishment orders have to wait until a vehicle departures, which increases the lead time for the retailers and therefore also the safety stock. Thus, a trade-off exists between expected shipment costs and holding costs. Our aim is to determine the shipment intervals and the required amount of safety stock for each retailer and the warehouse to minimize total cost, both for backorder costs and fill rate constraints. Previous work has focused on exact solutions which are computationally demanding and not applicable for larger real world problems. The focus of our present work is on the development of computationally attractive heuristics that can be applied in practice. A numerical study shows that the proposed heuristics perform well compared to the exact cost minimizing solutions. We also illustrate that the approaches are appropriate for solving real world problems using data from a large European company. We consider a one-warehouse-multiple-retailer inventory system where the retailers face stochastic customer demand, modelled as compound Poisson processes. Deliveries from the central warehouse to groups of retailers are consolidated using a time based shipment consolidation policy. This means that replenishment orders have to wait until a vehicle departures, which increases the lead time for the retailers and therefore also the safety stock. Thus, a trade-off exists between expected shipment costs and holding costs. Our aim is to determine the shipment intervals and the required amount of safety stock for each retailer and the warehouse to minimize total cost, both for backorder costs and fill rate constraints. Previous work has focused on exact solutions which are computationally demanding and not applicable for larger real world problems. The focus of our present work is on the development of computationally attractive heuristics that can be applied in practice. A numerical study shows that the proposed heuristics perform well compared to the exact cost minimizing solutions. We also illustrate that the approaches are appropriate for solving real world problems using data from a large European company. |
| Author | Kiesmüller, Gudrun P. Sonntag, Danja R. Johansson, Lina Marklund, Johan |
| Author_xml | – sequence: 1 givenname: Lina surname: Johansson fullname: Johansson, Lina organization: Faculty of Engineering LTH, Department of Industrial Management and Logistics, Lund University, P.O. Box 118, Lund SE-221 00, Sweden – sequence: 2 givenname: Danja R. surname: Sonntag fullname: Sonntag, Danja R. organization: Area Operations Management, University of Mannheim, Business School, P.O. Box 103462, Mannheim D-68131, Germany – sequence: 3 givenname: Johan orcidid: 0000-0001-7573-105X surname: Marklund fullname: Marklund, Johan email: johan.marklund@iml.lth.se organization: Faculty of Engineering LTH, Department of Industrial Management and Logistics, Lund University, P.O. Box 118, Lund SE-221 00, Sweden – sequence: 4 givenname: Gudrun P. surname: Kiesmüller fullname: Kiesmüller, Gudrun P. organization: Faculty of Economics and Management, Chair of Operations Management, Otto-von-Guericke-University Magdeburg, P.O. Box 4120, Magdeburg D-39106, Germany |
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| Snippet | •Heuristics for controlling one-warehouse-multiple-retailer inventory systems.•Time based shipment consolidation and compound Poisson demand.•Single-item and... We consider a one-warehouse-multiple-retailer inventory system where the retailers face stochastic customer demand, modelled as compound Poisson processes.... |
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| SubjectTerms | Civil Engineering Compound Poisson demand Engineering and Technology Inventory Multi-echelon Samhällsbyggnadsteknik Shipment consolidation Stochastic Teknik Transport Systems and Logistics Transportteknik och logistik |
| Title | Controlling distribution inventory systems with shipment consolidation and compound Poisson demand |
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