Replenishment Coordination in Distribution Systems with Multiple Items and Retailers

摘要

This paper discusses a distribution system with M items (or suppliers), N identical retailers, and a warehouse responsible for the replenishment of the system under random demand. There is room for improvement in the performance of the distribution system if one considers the opportunities to consolidate inbound and outbound shipments to and from the warehouse in order to further reduce logistics related costs. Such a practice mimics idealized cross-docking or merge-in-transit employed in practice that achieves higher cost savings as the transportation costs constitute a large portion of the total system cost. We analyze the economic impact of shipping several items to a retailer in the same outbound truck (outbound shipments consolidation) in addition to replenishing all the retailers simultaneously (inbound shipment consolidation) via several coordinated replenishment policies.