Chapter 3 Centralized planning models for multi-echelon inventory systems under uncertainty

Publisher Summary This chapter discusses planning models for systems that allow for uncertain and nonstationary demand and lead time processes. The chapter focuses on the PUSH systems with a central decision maker, who possesses continuously or periodically updated information about all inventories of all products at all relevant facilities and production stages; all replenishment decisions in the system are determined centrally based on this information. The chapter considers single-item discrete-time multi-echelon distribution systems that have the form of arborescence—that is, each location has a unique supplier. The same models may be applied to multi-stage production processes, in which each product is manufactured in batches from a single input product or raw material. Arborescence generalizes series systems, in that the same supply facility may be used by several (parallel) destinations.

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