Production , Manufacturing and Logistics A dynamic joint replenishment policy with auto-correlated demand

We consider a joint replenishment problem where the product demands are auto-correlated but independent of each other. A dynamic periodic review policy is developed, and its parameters are determined by a heuristic which aims at minimizing the total inventory cost, which includes the holding cost, the set up cost and the shortage cost. The heuristic updates the review interval and the target inventory level of every product at each review point based on the current inventory status and the past demand data. A simulation model is developed to compare the performance of this proposed policy with an existing periodic review policy. The results show that the proposed policy has consistently achieved significant saving in all the different experimental scenarios.

[1]  Arthur F. Veinott,et al.  Analysis of Inventory Systems , 1963 .

[2]  P. Young,et al.  Time series analysis, forecasting and control , 1972, IEEE Transactions on Automatic Control.

[3]  Derek Atkins,et al.  A lower bound on a class of coordinated inventory/production problems , 1987 .

[4]  Edward A. Silver,et al.  A Procedure, Involving Simulation, For Selecting The Control Variables Of An (S, c, s) Joint Ordering Strategy* , 1972 .

[5]  S. Viswanathan.  Note. Periodic Review s, S Policies for Joint Replenishment Inventory Systems , 1997 .

[6]  Joseph L. Balintfy,et al.  On a Basic Class of Multi-Item Inventory Problems , 1964 .

[7]  E. Ignall.  Optimal Continuous Review Policies for Two Product Inventory Systems with Joint Setup Costs , 1969 .

[8]  S. Goyal.  Determination of Optimum Packaging Frequency of Items Jointly Replenished , 1974 .

[9]  Boaz Golany,et al.  Comparative analysis of multi-item joint replenishment inventory models , 1992 .

[10]  D. Heath,et al.  Modelling the evolution of demand forecasts with application to safety stock analysis in production distribution systems , 1994 .

[11]  Chung-Mei Ho Chern.  A Multi Product Joint Ordering Model with Dependent Setup Cost , 1974 .

[12]  Edward A. Silver,et al.  A coordinated inventory control system for compound Poisson demand and zero lead time , 1975 .

[13]  Suresh Kumar Goyal,et al.  Joint replenishment inventory control: Deterministic and stochastic models , 1989 .

[14]  Gwilym M. Jenkins,et al.  Time series analysis, forecasting and control , 1971 .

[15]  E. Silver.  Letter to the Editor-Some Characteristics of a Special Joint-Order Inventory Model , 1965 .

[16]  Meir J. Rosenblatt.  Fixed cycle, basic cycle and EOQ approaches to the multi-item single-supplier inventory system , 1985 .

[17]  E. Silver.  A control system for coordinated inventory replenishment , 1974 .

[18]  Donald M. Simmons.  Optimal Inventory Policies under a Hierarchy of Setup Costs , 1972 .

[19]  Philip Melchiors,et al.  Calculating can-order policies for the joint replenishment problem by the compensation approach , 2002, Eur. J. Oper. Res..

[20]  Suresh Kumar Goyal,et al.  Some findings on joint replenishment of items with stochastic demand and backordering , 1988 .

[21]  Guy L. Curry,et al.  A Multiproduct Dependent Inventory Model , 1970 .

[22]  Pricha Pantumsinchai.  A Comparison of Three Joint Ordering Inventory Policies , 1992 .

[23]  D. Kropp,et al.  Periodic review and joint replenishment in stochastic demand environments , 1998 .

[24]  Paul H. Zipkin,et al.  Computing optimal (s, S) policies in inventory models with continuous demands , 1985, Advances in Applied Probability.

[25]  J. F. Cahen.  Stock policy in case of simultaneous ordering , 1972 .

[26]  Edward A. SfLVERt.  Establishing reorder points in the (S,c,s) coordinated control system under compound Poisson demand , 1981 .

[27]  Derek A. Atkins,et al.  Periodic Versus Can-Order Policies for Coordinated Multi-Item Inventory Systems , 1988 .

[28]  Meir J. Rosenblatt,et al.  On the economic ordering quantity for jointly replenished items , 1991 .

[29]  Richard Y. K. Fung,et al.  (T, S) policy for coordinated inventory replenishment systems under compound Poisson demands , 2001 .