Coordinated Logistics: Joint Replenishment with Capacitated Transportation for a Supply Chain

Nasuh Büyükkaramikli · Ülkü Gürler · Osman Alp

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Supply Chain and Inventory Management Advanced Queuing Theory Analysis Logistics and Transportation Systems

Abstract

In this study, we consider the integrated inventory replenishment and transportation operations in a supply chain where the orders placed by the downstream retailer are dispatched by the upstream warehouse via an in‐house fleet of limited size. We first consider the single‐item single‐echelon case where the retailer operates with a quantity based replenishment policy, ( r , Q ), and the warehouse is an ample supplier. We model the transportation operations as a queueing system and derive the operating characteristics of the system in exact terms. We extend this basic model to a two‐echelon supply chain where the warehouse employs a base‐stock policy. The departure process of the warehouse is characterized in distribution, which is then approximated by an Erlang arrival process by matching the first two moments for the analysis of the transportation queueing system. The operating characteristics and the expected cost rate are derived. An extension of this system to multiple retailers is also discussed. Numerical results are presented to illustrate the performance and the sensitivity of the models and the value of coordinating inventory and transportation operations.

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References

1982Approximating a Point Process by a Renewal Process, I: Two Basic Methods 1985A Multi-Echelon Inventory Model for a Repairable Item with One-for-One Replenishment 1993APPROXIMATIONS FOR THE GI/G/m QUEUE 1990Simple Solution Procedures for a Class of Two-Echelon Inventory Problems 1988Multiproduct Queueing Networks with Deterministic Routing: Decomposition Approach and the Notion of Interference 2002The Inventory Benefit of Shipment Coordination and Stock Rebalancing in a Supply Chain 1993Exact and Approximate Evaluation of Batch-Ordering Policies for Two-Level Inventory Systems 1964On a Basic Class of Multi-Item Inventory Problems

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