TY - JOUR

T1 - Solving the one-warehouse n-retailers problem with stochastic demand

T2 - An inter-ratio policies approach

AU - Chavarro, Gabriela

AU - Fresen, Matthaus

AU - González, Esneyder Rafael

AU - Ferro, David Barrera

AU - López-Ospina, Héctor

N1 - Publisher Copyright:
© 2020 by the authors; licensee Growing Science, Canada.

PY - 2020

Y1 - 2020

N2 - 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.

AB - 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.

KW - Heuristics

KW - Integer-ratio policies

KW - Stochastic demand

KW - Two-echelon inventory systems

UR - http://www.scopus.com/inward/record.url?scp=85097017717&partnerID=8YFLogxK

U2 - 10.5267/j.ijiec.2020.7.001

DO - 10.5267/j.ijiec.2020.7.001

M3 - Article

AN - SCOPUS:85097017717

SN - 1923-2926

VL - 12

SP - 131

EP - 142

JO - International Journal of Industrial Engineering Computations

JF - International Journal of Industrial Engineering Computations

IS - 1

ER -