Simple evaluation of echelon stock (R,Q) policies for two-level inventory systems

Abstract

A two-level inventory system with one warehouse and N retailers is considered. Leadtimes (transportation times) are constant, and the retailers face different compound Poisson demand processes. All facilities apply continuous review echelon stock (R, Q) policies with different reorder points and batch quantities. We provide a simple method for exact evaluation of holding and shortage costs.

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