IDEAS home Printed from
   My bibliography  Save this article

The Logistics Impact of a Mixture of Order-Streams in a Manufacturer-Retailer System


  • Ananth V. Iyer

    () (Krannert Graduate School of Management, 1310 Krannert Building, Purdue University, West Lafayette, Indiana 47907-1310)

  • Apurva Jain

    () (University of Washington Business School, Box 353200, Seattle, Washington 98195-3200)


We model a supply chain with two retail warehouses that place replenishment orders with a common manufacturing capacity. The two retailers differ in the variability of their order-streams. The order-stream from one retail warehouse is modeled as a Poisson process and from the other as a hyperexponential renewal process. Each retail warehouse uses a base-stock policy to place replenishment orders with the manufacturer. The manufacturer is modeled as a first-come-first-serve, single exponential server queue. We analyze the supply-side impact of this mixture of order-streams received by the manufacturer on both retailers. An exact analysis of this base-model generates closed-form expressions for distributions of the lead-time, outstanding orders, and expected inventory costs for each retailer, and leads to comparative results about the two retailers- performance measures. The base-model is extended to accommodate finished goods at the manufacturer, more than two retailers, and bulk-arrivals. We use the model to suggest managerial insights about the impact of the presence of a high-variability retailer on other retailers who share capacity, the distorting impact of manufacturer finished goods inventory on retailer incentives, and the incentives for retailers to participate in variability-reduction programs in the grocery industry.

Suggested Citation

  • Ananth V. Iyer & Apurva Jain, 2003. "The Logistics Impact of a Mixture of Order-Streams in a Manufacturer-Retailer System," Management Science, INFORMS, vol. 49(7), pages 890-906, July.
  • Handle: RePEc:inm:ormnsc:v:49:y:2003:i:7:p:890-906

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. GĂ©rard P. Cachon & Martin A. Lariviere, 1999. "Capacity Allocation Using Past Sales: When to Turn-and-Earn," Management Science, INFORMS, vol. 45(5), pages 685-703, May.
    2. Varian, Hal R, 1980. "A Model of Sales," American Economic Review, American Economic Association, vol. 70(4), pages 651-659, September.
    3. Narasimhan, Chakravarthi, 1988. "Competitive Promotional Strategies," The Journal of Business, University of Chicago Press, vol. 61(4), pages 427-449, October.
    4. Ananth. V. Iyer & Jianming Ye, 2000. "Assessing the Value of Information Sharing in a Promotional Retail Environment," Manufacturing & Service Operations Management, INFORMS, vol. 2(2), pages 128-143, February.
    5. Jing-Sheng Song, 1994. "The Effect of Leadtime Uncertainty in a Simple Stochastic Inventory Model," Management Science, INFORMS, vol. 40(5), pages 603-613, May.
    6. Hau L. Lee & V. Padmanabhan & Seungjin Whang, 1997. "Information Distortion in a Supply Chain: The Bullwhip Effect," Management Science, INFORMS, vol. 43(4), pages 546-558, April.
    7. Frank Chen & Zvi Drezner & Jennifer K. Ryan & David Simchi-Levi, 2000. "Quantifying the Bullwhip Effect in a Simple Supply Chain: The Impact of Forecasting, Lead Times, and Information," Management Science, INFORMS, vol. 46(3), pages 436-443, March.
    8. Susan L. Albin, 1986. "Delays for Customers from Different Arrival Streams to a Queue," Management Science, INFORMS, vol. 32(3), pages 329-340, March.
    9. Charles R. Sox & L. Joseph Thomas & John O. McClain, 1997. "Coordinating Production and Inventory to Improve Service," Management Science, INFORMS, vol. 43(9), pages 1189-1197, September.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Cheung, Ki Ling & Song, Jing-Sheng & Zhang, Yue, 2017. "Cost reduction through operations reversal," European Journal of Operational Research, Elsevier, vol. 259(1), pages 100-112.
    2. V. Daniel R. Guide , Jr. & Gilvan C. Souza & Luk N. Van Wassenhove & Joseph D. Blackburn, 2006. "Time Value of Commercial Product Returns," Management Science, INFORMS, vol. 52(8), pages 1200-1214, August.
    3. Zhu, Wanshan & Wu, Zhengping, 2014. "The stochastic ordering of mean-preserving transformations and its applications," European Journal of Operational Research, Elsevier, vol. 239(3), pages 802-809.
    4. Ananth V. Iyer & Apurva Jain, 2004. "Modeling the Impact of Merging Capacity in Production-Inventory Systems," Management Science, INFORMS, vol. 50(8), pages 1082-1094, August.
    5. Sanajian, Nima & BalcIog[small tilde]lu, BarIs, 2009. "The impact of production time variability on make-to-stock queue performance," European Journal of Operational Research, Elsevier, vol. 194(3), pages 847-855, May.
    6. Jain, Apurva, 2007. "Value of capacity pooling in supply chains with heterogeneous customers," European Journal of Operational Research, Elsevier, vol. 177(1), pages 239-260, February.
    7. repec:pal:jorsoc:v:61:y:2010:i:1:d:10.1057_jors.2008.139 is not listed on IDEAS


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:49:y:2003:i:7:p:890-906. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.