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Inventory performance under pack size constraints and spatially-correlated demand

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  • Yan, Xi Steven
  • Robb, David J.
  • Silver, Edward A.

Abstract

Motivated by a problem facing a large retailer, we consider the impact of pack size on the performance of a periodic review inventory system in the presence of spatial (i.e., between retailers) correlation of demand--which we model using an equicorrelated multivariate Poisson distribution. Employing simulation, we utilise a full factorial experiment to provide support for decisions on product and supplier selection, and whether or not packs should be split during distribution. We consider variables such as pack size, correlation, and the number of branches, and discuss how they and their interactions impact performance metrics such as inventory and shortage levels and the bullwhip effect.

Suggested Citation

  • Yan, Xi Steven & Robb, David J. & Silver, Edward A., 2009. "Inventory performance under pack size constraints and spatially-correlated demand," International Journal of Production Economics, Elsevier, vol. 117(2), pages 330-337, February.
    • Handle: RePEc:eee:proeco:v:117:y:2009:i:2:p:330-337
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    Cited by:

    1. Wen, Naijun & Graves, Stephen C. & Justin Ren, Z., 2012. "Ship-pack optimization in a two-echelon distribution system," European Journal of Operational Research, Elsevier, vol. 220(3), pages 777-785.
    2. Soto Cardona, Osman Camilo & Mejía Argueta, Christopher & Sarmiento, Alfonso Tullio, 2015. "A cost-efficient method to optimize package size in emerging marketsAuthor-Name: Gámez Albán, Harol Mauricio," European Journal of Operational Research, Elsevier, vol. 241(3), pages 917-926.

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