Production and Operations Management 2006
Heuristic Coordination of Decentralized Inventory Systems Using Induced Backorder Costs
Abstract
In this paper, we investigate a one‐warehouse multiple‐retailer system, where the inventory control decisions are coordinated using a near optimal induced backorder cost, β*. All installations use continuous review installation‐stock ( R, Q) policies. The analysis builds on an approximation model where the stochastic warehouse delays are replaced by their correct averages. The contributions include insights as to how β* is influenced by system parameters, and the determination of simple closed form β* estimates. The latter offering a practical means to achieve coordinated control of large size systems.
- DOI
- 10.1111/j.1937-5956.2006.tb00246.x
- Sources
- openalex