Inventory control in divergent supply chains with time‐based dispatching and shipment consolidation

Abstract

This article analyses a divergent supply chain consisting of a central warehouse and N nonidentical retailers. The focus is on joint evaluation of inventory replenishment and shipment consolidation effects. A time-based dispatching and shipment consolidation policy is used at the warehouse in conjunction with real-time point-of-sale data and centralized inventory information. This represents a common situation, for example, in various types of vendor managed inventory systems. The main contribution is the derivation of an exact recursive procedure for determining the expected inventory holding and backorder costs for the system, under the assumption of Poisson demand. Two heuristics for determining near optimal shipment intervals are also presented. The results are applicable both for single-item and multiitem systems.

Exact Analysis of Divergent Inventory Systems with Time-Based Shipment Consolidation and Compound Poisson Demand

“…Our work is closely related to Marklund (2011), which considers a similar system under the more restrictive assumption of Poisson demand. Marklund (2011) presents a fast recursive procedure for determining the exact average costs per time unit, and for optimizing the reorder levels at all inventory locations for a given set of shipment intervals. A heuristic for determining near optimal shipment intervals is also presented.…”

Pricing and timing of consolidated deliveries in the presence of an express alternative: Financial and environmental analysis

“…More closely related to our research is that on time-based shipment consolidation. This is considered in Marklund (2011), who analyzes a divergent supply chain with timebased consolidation. He provides an exact recursive procedure to determine the costs of the system, and two heuristics for calculating the optimal dispatch frequency when a rst-come-rst-serve allocation policy is used.…”

“…There are several examples of consolidation eorts where this is the case. Co-loading with set sailing dates (Taherian, 2014), time-based consolidation in distribution systems (Marklund, 2011), and intermodal truck-train transports (Eng-Larsson and Kohn, 2012) all dispatch consolidated shipments at a certain frequency. Because such eorts would lead to larger volumes per shipment, they are often claimed to not just improve environmental performance but also reduce costs (e.g.…”

Pricing and Lot sizing of a Decaying item under Group Dispatching with Time-dependent Demand and Decay Rates

“…Wong et al [20] extended a shipment consolidation policy and the e ects of consolidation were studied in their research. Marklund [21] extended a model to examine the e ects of consolidation and replenishment. Howard and Marklund [22] evaluated the e ects of time-based consolidation and stock allocation in a chain.…”