Order splitting under periodic review inventory systems

Chiang, Chi

doi:10.1016/s0925-5273(00)00046-3

Cited by 38 publications

(21 citation statements)

References 7 publications

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“…In doing such further research, results on order splitting (e.g. by Chiang (2001)) should be taken into account. However, as the term suggests, those models still assume that orders are placed at reviews, and ordering opportunities are also typically predetermined, leaving many opportunities for future research.…”

Section: Discussionmentioning

confidence: 99%

“…Two decades ago, Flynn and Garstka (1990) already formulated a model and according policies where orders are allowed to be placed at the start of sub-periods of equal length during a review period. Chiang (2001) proposes order splitting in a periodic review framework. That is, at the start of a period an order is placed, and this order arrives in batches with fixed interarrival times in the current period.…”

Section: Introductionmentioning

confidence: 99%

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Periodic review and continuous ordering

Prak

Teunter

Riezebos

2015

European Journal of Operational Research

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There exist many inventory control studies that consider either continuous review & continuous ordering, or periodic review & periodic ordering. Mixtures of the two are hardly ever studied. However, the model with periodic review and continuous ordering is highly relevant in practice, as information on the actual inventory level is not always up to date while making ordering decisions. This paper will therefore consider this case of periodic review and continuous ordering. Assuming zero fixed ordering costs, and allowing for a non-negative lead time and a general demand process, we first consider a one-period decision problem with no salvage cost for inventory remaining at the end of the period. In this setting we derive a base-line optimal order path, which is described by a simple newsvendor solution with safety stocks increasing towards the end of a review period. We then show that for the general, multi-period problem, the optimal policy in a period is to first arrive at this path by not ordering until the excess buffer stock from the previous review period is depleted, then follow the path for some time by continuous ordering, and stop ordering towards the end to limit excess stocks for the next review period. An important managerial insight is that, typically and possibly counterintuitively, no order should be placed at a review moment, although this may seem intuitive and is also the standard assumption in periodic review models. We illustrate for Normally distributed demand that adhering to the optimal ordering path instead can lead to cost reductions of 30% to 60% compared to periodic ordering, i.e. ordering exclusively at review moments.

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Section: Discussionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Periodic review and continuous ordering

Prak

Teunter

Riezebos

2015

European Journal of Operational Research

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“…Roughly, the literature can be split up in two separate substreams: those papers that consider the cost problem from the viewpoint of the buyer (the independent optimization models, e.g. [30], [24], [31], [9] and [8]), and those that approach the problem from the viewpoint of both buyer and supplier (the joint optimization models, e.g. [2], [16] and [22]).…”

Section: [Insert Figure 1 Here]mentioning

confidence: 99%

The impact of delivery lot splitting on delivery reliability in a two-stage supply chain

Nieuwenhuyse¹,

Vandaele

2006

International Journal of Production Economics

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Current supply chain policies are increasingly influenced by the lean philosophy, which calls for increased synchronization and smaller but more frequent shipments between the supply chain partners. One of the strategies used in this respect is lot splitting, i.e. the splitting of a single order quantity among multiple deliveries. Lot splitting is known to offer numerous advantages over a lot-for-lot policy, such as decreasing flow times and lower congestion levels. In this paper, we prove analytically that lot splitting improves the delivery reliability of the supplier, and hence the production schedule stability of the buyer. We also propose an approximation to estimate the delivery reliability in terms of the lot splitting policy and the system characteristics.

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“…They find that the major improvement is obtaining a very simple and efficient process to improve the lower bound of batch size. Chiang [18] proposes that when the order assignment cost is high, one can divide the order into multipledelivery or two-delivery mode. Then it is possible to study the order division method under periodic review system to find out the optimum delivery number in the order delivery time period, and finally reduce the overall inventory cost effectively.…”

Section: Combination Of Ordermentioning

confidence: 99%

The optimum design of a warehouse system on order picking efficiency

Hsieh

Tsai

2005

Int J Adv Manuf Technol

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From literature review and deep understanding on the practical industry, it is understood that the proper use of storage assignment policies can use minimum storage space to reach the purpose of minimum total traveling distance, and this has a direct impact on enhancing the order picking performance. At the same time, proper routing planning can minimize overall order picking cost, and finally reach the goal of picking performance enhancement in unit time. Therefore, this paper considers the effects on the order picking system performance for factors such as quantity and layout type of cross aisles in a warehouse system, storage assignment policy, picking route, average picking density inside an aisle, and order combination type, etc. A software, eM-plant, will be used as a simulation and analysis tool, a warehouse design database will be developed, which is based on the minimum overall traveling distance as the optimum performance index, the cross aisle quantity, warehouse layout, storage assignment, picking route planning, picking density and order combination type will be optimally integrated and planned in the warehouse system. Finally, we provide this database to the industry as a reference in the warehouse planning or warehouse design improvement in the future.

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Order splitting under periodic review inventory systems

Cited by 38 publications

References 7 publications

Periodic review and continuous ordering

Periodic review and continuous ordering

The impact of delivery lot splitting on delivery reliability in a two-stage supply chain

The optimum design of a warehouse system on order picking efficiency

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