Coordination and Control of Multi-Echelon Inventory Systems

Efficient management of multi-echelon systems requires coordination between replenishment decisions, transportation planning and inventory control. In this context, we have studied three inventory models with stockpoints having different order/transportation moments.

The first model we have studied is a single-item two-echelon serial inventory system with stochastic demand. The system is centrally controlled and ordering decisions are based on echelon order-up-to policies. The review period of the upper echelon is an integer multiple of the review period of the lower echelon.  We assume that linear holding and backorder costs are charged as well as fixed ordering costs.

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