The One-Warehouse Multiretailer Problem with an Order-Up-To Level Inventory Policy

Date

2010-10-01

Author

Solyali, Oguz
Süral, Haldun
Denizel, Meltem

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This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

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We consider a two-level system in which a warehouse manages the inventories of multiple retailers. Each retailer employs an order-up-to level inventory policy over T periods and faces an external demand which is dynamic and known. A retailer's inventory should be raised to its maximum limit when replenished. The problem is to jointly decide on replenishment times and quantities of warehouse and retailers so as to minimize the total costs in the system. Unlike the case in the single level lot-sizing problem, we cannot assume that the initial inventory will be zero without loss of generality. We propose a strong mixed integer program formulation for the problem with zero and nonzero initial inventories at the warehouse. The strong formulation for the zero initial inventory case has only T binary variables and represents the convex hull of the feasible region of the problem when there is only one retailer. Computational results with a state-of-the art solver reveal that our formulations are very effective in solving large-size instances to optimality. (C) 2010 Wiley Periodicals, Inc. Naval Research Logistics 57: 653-666, 2010

Subject Keywords

Management Science and Operations Research, Modelling and Simulation, Ocean Engineering

URI

https://hdl.handle.net/11511/38625

Collections

Department of Industrial Engineering, Article