The Can-Order Policy for One-Warehouse N-Retailer Inventory System: A Heuristic Approach

Abstract

We study an application of the can-order policy in one-warehouse n-retailer inventory systems, and propose a heuristic approach for setting the appropriate inventory policy. On the can-order policy, an order is triggered when a retailer's inventory position reaches its must-order level. Then other retailers are examined whether their inventory reaches their can-order level, and if so they are filled by this order as well. Warehouse fulfills all involved retailers' inventory to their order-up-to levels. The can-order policy is not only able to save the total system-wide cost from joint replenishment, but it is also simple to use. Computer simulation is utilized to preliminarily study and to determine the best-known solution. We propose a heuristic approach utilizing the decomposition technique, iterative procedure, and golden section search to obtain the satisfying total system-wide cost. This can save our computational time to find the appropriate inventory policy setting from the reduced search space. We found that the proposed heuristic approach performs very well with the average cost gap of less than 2% comparing to the best-known solution. Thus, the can-order policy can be very useful for such systems. target service level. Thus, the total system-wide cost can be calculated from such two decision variables.

Determining (s, S) Inventory Policy for Healthcare System

“…For instance, (Kleijnen & Wan's, 2007) algorithms are suitable for continuous distributions, while those from (Zheng & Federgruen, 1991;Fu & Healy, 1997) are favorable for discrete distributions. Because of its capability, simulation-optimization approach has been adopted in several studies, including that of (Shang et al, 2008;Pukcarnon et al, 2014;Rosales et al, 2014;Zhang et al, 2014;Srizongkhram et al 2021). (Shang et al, 2008) constructs a spreadsheet model to determine the appropriate level of safety stock for a given service level.…”

A systematic literature review on the joint replenishment problem solutions: 2006-2015

“…Related works In second, there were models on the Single Warehouse Multi-retailer problem (SWMR), in which a warehouse must manage the replenishments from suppliers to a set of retailers, finding the optimal configuration of the system (Yang et al, 2012), as well as the Joint Replenishment & Delivery Problem (JRD), which approaches the delivery scheduling (routing) of multi-products along with the joint replenishment problem (Pukcarnon et al, 2014).…”

Enfoque práctico para la determinación de políticas de inventario centralizadas en un sistema 1-Bodega/N-Minoristas a través de simulación/optimización

“…Este sistema está claramente desarrollado en el artículo escrito por Pukcarnon et al (2014) en el que explican que el sistema OWNR es un sistema de dos etapas que busca determinar las políticas óptimas de reabastecimiento de inventario de los minoristas y la bodega central para que el costo total de inventario correspondiente sea mínimo. Los autores también mencionan que la aleatoriedad de la demanda es un factor cada vez más importante a tener en cuenta.…”

“…Por ejemplo, Abdul-Jalbar et al (2010) y Pukcarnon et al (2014) han propuesto heurísticas que ofrecen resultados con un control más amplio de variables. Algunos artículos se han ocupado de la demanda determinística.…”

“…El uso de la demanda estocástica fue considerado por Pukcarnon et al, (2014), quienes utilizaron una política de revisión continua de inventario con un algoritmo de optimización de simulación combinada. No es común encontrar artículos en donde se muestre tanto la demanda estocástica y el tiempo de espera, como se va a mostrar en la presente publicación.…”