MULTIECHELON VS SINGLE-ECHELON INVENTORY CONTROL POLICIES FOR LOW-DEMAND ITEMS

Date

1994-05-01

Author

HAUSMAN, WH
ERKIP, NK

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Multi-echelon inventory systems are often controlled as a network of single-echelon inventory systems for simplicity of managerial authority, organizational control, and performance monitoring. This paper explores the amount of suboptimization in such a situation, using an actual demand data set provided by other researchers. We consider low-demand, high-cost items controlled on an (S - 1, S) basis, with all warehouse stockouts met on an emergency-ordering basis. We demonstrate that the suboptimality penalty for this data set is 3% to 5% when single-echelon systems are appropriately parameterized.

Subject Keywords

Management Science and Operations Research, Strategy and Management

URI

https://hdl.handle.net/11511/64444

Journal

MANAGEMENT SCIENCE

DOI

https://doi.org/10.1287/mnsc.40.5.597

Collections

Department of Industrial Engineering, Article

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Citation Formats

W. HAUSMAN and N. ERKIP, “MULTIECHELON VS SINGLE-ECHELON INVENTORY CONTROL POLICIES FOR LOW-DEMAND ITEMS,” MANAGEMENT SCIENCE, pp. 597–602, 1994, Accessed: 00, 2020. [Online]. Available: https://hdl.handle.net/11511/64444.