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Consolidation effects and inventory portfolios

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  • Wanke, Peter F.

Abstract

This paper presents a formal analysis of the consolidation effect in a wider perspective. While demonstrating that the stock saving structure depends on the interaction between the coefficient of variation of demand and the ratio between inventory ordering and holding costs, this research indicates that the ratio between the standard deviations of lead time at potential facilities is the key variable for consolidation. Sensitivity analyses are also performed to address common managerial issues, which can arise during the consolidation decision, such as the impact on total costs and the assumption of uncorrelated demands.

Suggested Citation

  • Wanke, Peter F., 2009. "Consolidation effects and inventory portfolios," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 45(1), pages 107-124, January.
    • Handle: RePEc:eee:transe:v:45:y:2009:i:1:p:107-124
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    Citations

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    Cited by:

    1. Wang, Wenbin & Yue, Shuai, 2015. "An inventory pooling model for spare units of critical systems that serve multi-companies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 76(C), pages 34-44.
    2. Wanke, Peter F., 2012. "Product, operation, and demand relationships between manufacturers and retailers," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(1), pages 340-354.
    3. Abdelsalam, Hisham M. & Elassal, Magy M., 2014. "Joint economic lot sizing problem for a three—Layer supply chain with stochastic demand," International Journal of Production Economics, Elsevier, vol. 155(C), pages 272-283.
    4. Osman, Hany & Demirli, Kudret, 2012. "Integrated safety stock optimization for multiple sourced stockpoints facing variable demand and lead time," International Journal of Production Economics, Elsevier, vol. 135(1), pages 299-307.
    5. Ponte, Borja & Costas, José & Puche, Julio & Pino, Raúl & de la Fuente, David, 2018. "The value of lead time reduction and stabilization: A comparison between traditional and collaborative supply chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 111(C), pages 165-185.
    6. Hosang Jung & Sukjae Jeong, 2018. "The Economic Effect of Virtual Warehouse-Based Inventory Information Sharing for Sustainable Supplier Management," Sustainability, MDPI, vol. 10(5), pages 1-19, May.

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