Solving the one-warehouse n-retailers problem with stochastic demand: An inter-ratio policies approach

Gabriela Chavarro, Matthaus Fresen, Esneyder Rafael González, David Barrera Ferro*, Héctor López-Ospina

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

5 Scopus citations


In this paper, we consider a two-echelon supply chain in which one warehouse provides a single product to N retailers, using integer-ratio policies. Deterministic version of the problem has been widely studied. However, this assumption can lead to inaccurate and ineffective decisions. In this research, we tackle the stochastic version of two-echelon inventory system by designing an extension of a well-known heuristic. This research considers customer demands as following a normal density function. A set of 240 random instances was generated and used in evaluating both the deterministic and stochastic solution approaches. Due to the nature of the objective function, evaluation was carried out via Monte Carlo simulation. For variable demand settings, computational experiments shows that: i) the use of average demand to define the inventory policy implies an underestimation of the total cost and ii) the newly proposed method offers cost savings.

Original languageEnglish
Pages (from-to)131-142
Number of pages12
JournalInternational Journal of Industrial Engineering Computations
Issue number1
StatePublished - 2020
Externally publishedYes

Bibliographical note

Publisher Copyright:
© 2020 by the authors; licensee Growing Science, Canada.


  • Heuristics
  • Integer-ratio policies
  • Stochastic demand
  • Two-echelon inventory systems


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