An Analysis of Two Two-Echelon Inventory Systems.
CORNELL UNIV ITHACA N Y SCHOOL OF OPERATIONS RESEARCH AND INDUSTRIAL ENGINEERING
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This paper analyzes the probabilistic behavior of a two-echelon inventory system. In this system primary demands occur at one of the lower echelon locations called bases. Bases are resupplied only by the upper echelon called the depot the depot is resupplied by an external supplier. All demands occuring when a base or depot is out of stock are backordered. First the probability distribution is developed for the number of backorders outstanding at a point in time when the bases follow continuous review Q,r policies and the depot follows a periodic review order-up-to-S policy. Next the expected number of backorders outstanding at each point in time for two systems is compared. In the first system, bases follow a continuous review s-1,s policy and the depot follows a periodic review order-up-to-S policy in the second system, all locations follow a continuous review s-1,s policy. Differences in the performance for the two system,s are illustrated using Air Force data. Lastly the probability distribution is derived for the number of backorders outstanding at a particular point in time at the bases when all locations follow a periodic review order-up-to-s policy.
- Operations Research