Kok, A.G. de Janssen, F.B.S.L.P. (Tilburg University, Center for Economic Research)
Abstract
In this paper we discuss demand management problems in a multi-stage distribution chain. We focus on distribution chains where demand processes have high variability due to a few large customer orders. We give a possible explanation, and suggest two simple procedures that help to smooth demand. It is shown that these procedures yield stock reductions of 40%-50% in practical situations. The quantitative results are based on the analysis of the underlying model related to the two procedures proposed, called large order overflow, applicable if the supplying organization executes a multi-stage distribution chain, and delivery splitting, applicable to any situation.
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Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number
39.
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