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Distribution policy in an M-store regional supply chain

Author

Listed:
  • Chumpol Monthatipkul
  • Sanchoy Das
  • Pisal Yenradee

Abstract

The Regional Supply Chain Replenishment problem consists of one warehouse distributing one product to M-stores. Here, we assume the store demand is independent and normally distributed. There is one truck at the warehouse, which makes one replenishment trip to one store per period. Based on the store inventory level, the warehouse makes two decisions in each period: which store to replenish and the replenishment quantity. The objective is to position regional inventory to minimise lost sales. Two heuristic solutions are presented. The BL-Heuristic is easily implemented but performs well when demand variance is low. The AD-Heuristic uses an LP model to prescribe a replenishment plan. The key factor in the AD-Heuristic is the demand buffer factor K, and a simulation method for deriving K is proposed. The efficiency of the AD-Heuristic was tested, and its performance stays consistently within 5% of the adjusted lower bound.

Suggested Citation

  • Chumpol Monthatipkul & Sanchoy Das & Pisal Yenradee, 2010. "Distribution policy in an M-store regional supply chain," International Journal of Integrated Supply Management, Inderscience Enterprises Ltd, vol. 5(3), pages 214-238.
    • Handle: RePEc:ids:ijisma:v:5:y:2010:i:3:p:214-238
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    Cited by:

    1. Barros, Júlio & Cortez, Paulo & Carvalho, M. Sameiro, 2021. "A systematic literature review about dimensioning safety stock under uncertainties and risks in the procurement process," Operations Research Perspectives, Elsevier, vol. 8(C).

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