Analysis of a Two-Echelon Inventory System in Which All Locations Follow Continuous Review (S,s) Policies
Abstract
This paper studies the probabilistic behavior of a two-echelon inventory system consisting of a depot and a set of bases. Primary demands occur at the bases for a single unit at a time. Whenever a base's inventory position reaches the reorder point (s), the base orders sufficient inventory from the depot to raise the base's inventory position to S. Similarly, the depot places an order to its supplier when its inventory position reaches its reorder point; the order is for the number of units required to raise the depot's inventory position to a prespecified level. Thus all locations follow a continuous review (S,s) policy. All excess demand is assumed to be backordered. The main objective is to derive the probability distribution for the number of backordered units at a base at an arbitrary point in time given an item follows a known (S,s) policy at each base and the depot. The demand process at each base is assumed to be a stationary Poisson process. The analysis is carried out for two cases. In the first case, it is assumed the system consists of a large number of bases; in the second case, it is assumed there are two bases in the system. To simplify the discussion it is assumed in both cases that all bases follow the same (S,s) policy.
Document Details
- Document Type
- Technical Report
- Publication Date
- Jun 01, 1977
- Accession Number
- ADA042358
Entities
People
- John A. Muckstadt
Organizations
- Cornell University College of Engineering