Multilocation Inventory Systems With Centralized Information.

The management of multi-echelon inventory systems has been both an important and challenging research area for many years. The rapid advance in information technology and the emphasis on integrated supply chain management have new implications for the successful operation of distribution systems. This research focuses on the study of some fundamental issues related to the operation of a multilocation inventory system with centralized information. First, we do a comparative analysis to evaluate the overall performance of individual versus centralized ordering policies for a multi-store distribution system where centralized information is available. This study integrates the existing research and clarifies one of the fundamental questions facing inventory managers today: whether or not ordering decisions should be centralized. Next, we consider a multi-store distribution system where emergency transshipments are permitted among these stores. Based on some simplifying assumptions, we develop an integrated model with a joint consideration of inventory and transshipment components. An approximately optimal (s, S) policy is obtained through a dynamic programming technique. This ordering policy is then compared with a simplified policy that assumes free and instantaneous transshipments. We also examine the relative performance of base stock policies for a centralized-ordering distribution system. Numerical studies are provided to give general guidelines for use of the policies

Real-time Allocation Decisions in Multi-echelon Inventory Control

Inventory control is a crucial activity for many companies. Given the recent advances in information technology, there have never been greater opportunities for coordinated inventory control across supply chain facilities. But how do we design efficient control methods and policies that take advantage of the detailed information that is now becoming available? This doctoral thesis investigates these issues within the field of inventory control theory. The objective of the research is: To develop mathematical models and policies for efficient control and increased understanding of stochastic multi-echelon inventory systems, with a focus on allocation decisions and the use of real-time information. This thesis is based on five scientific papers which are preceded by a summarizing introduction. The papers address different types of inventory distribution systems, all consisting of a central stocking facility that supplies an arbitrary number of local stocking facilities (referred to as retailers). The retailers face stochastic end customer demand. The systems are characterized by the presence of real-time inventory information, including continuously updated information on the current inventory levels at different facilities and on the locations of outstanding orders. In Paper I and Paper II we derive and evaluate different decision rules for stock allocation (known as allocation policies) for a central warehouse which applies a time based shipment consolidation strategy. The allocation policy determines how the central warehouse should distribute its stock among different retailers in case of shortages. New allocation policies that utilize real-time information are compared to the commonly used First Come - First Served policy which requires less information. In Paper III we shift focus to the delivery policy at a central warehouse which supplies multiple retailers that order in batches. When the central warehouse cannot satisfy an entire retailer order immediately, the delivery policy determines if the order should be shipped in several parts or in its entirety when all items are available. We investigate the value of using a new delivery policy that uses real-time information on when replenishments will arrive at the central warehouse. The information is used to determine the best course of action for each order placed by the retailers. We also study how to allocate safety stocks to all facilities in the system given this new policy. In Paper IV and Paper V we consider a system where retailers may receive emergency shipments from a support warehouse in combination with regular replenishments from a central warehouse/outside supplier. We investigate how safety stocks should be allocated between the retailers and the support warehouse. Furthermore, we evaluate the benefits of tracking orders in real time and using this information in the decision whether or not to request an emergency shipment

Inventory models with lateral transshipments : a review

Lateral transshipments within an inventory system are stock movements between locations of the same echelon. These transshipments can be conducted periodically at predetermined points in time to proactively redistribute stock, or they can be used reactively as a method of meeting demand which cannot be satised from stock on hand. The elements of an inventory system considered, e.g. size, cost structures and service level denition, all in uence the best method of transshipping. Models of many dierent systems have been considered. This paper provides a literature review which categorizes the research to date on lateral transshipments, so that these dierences can be understood and gaps within the literature can be identied

Lateral transshipment of slow moving critical medical items

This research studies lateral transshipment of critical medical items that have low demands. Due to the high prices of medical items and their limited shelf lives, the expirations contribute significantly to the current prohibitively high cost of the healthcare system. Lateral transshipment between hospitals in a medical system provides opportunities to reduce the expiration costs. This paper studies the decision rule for lateral transshipment in a two-hospital system and extends the rule for the multiple-hospital cases. The decision rule takes the myopic best action by assuming no transshipments will be performed in the future. Numerical experiments demonstrate significant cost savings and the decision rule has a small gap from the upper bound of the total saving. The savings are more considerable when the difference of demand rates at different locations is large and the life time of the medical item is not too long or too short