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Operating characteristics of a two‐echelon inventory system for repairable and consumable items under batch ordering and shipment policy

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  • Hau L. Lee
  • Kamran Moinzadeh

Abstract

In this article we have generalized previous models on multiechelon recoverable inventory systems to cover the cases of batch ordering and shipment policy, and when items can either be repaired or condemned. The batch ordering and shipment policy is appropriate when the setup cost for shipment and order and/or the demand rates of the items are relatively high. The operating characteristics of such a system have been studied. Specifically, the probability distribution of backorder levels at the bases are analyzed for different repair‐time distributions. An approximation scheme is proposed for this distribution, and is evaluated using extensive simulation results. The results indicate that the scheme is very effective in providing near‐optimal stocking levels in such a system.

Suggested Citation

  • Hau L. Lee & Kamran Moinzadeh, 1987. "Operating characteristics of a two‐echelon inventory system for repairable and consumable items under batch ordering and shipment policy," Naval Research Logistics (NRL), John Wiley & Sons, vol. 34(3), pages 365-380, June.
    • Handle: RePEc:wly:navres:v:34:y:1987:i:3:p:365-380
    DOI: 10.1002/1520-6750(198706)34:33.0.CO;2-P
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    References listed on IDEAS

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    1. S. L. Albin, 1982. "On Poisson Approximations for Superposition Arrival Processes in Queues," Management Science, INFORMS, vol. 28(2), pages 126-137, February.
    2. F. Russell Richards, 1976. "A Stochastic Model of a Repairable-Item Inventory System with Attrition and Random Lead Times," Operations Research, INFORMS, vol. 24(1), pages 118-130, February.
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    4. Kamran Moinzadeh & Hau L. Lee, 1986. "Batch Size and Stocking Levels in Multi-Echelon Repairable Systems," Management Science, INFORMS, vol. 32(12), pages 1567-1581, December.
    5. Paul H. Zipkin, 1986. "Models for Design and Control of Stochastic, Multi-Item Batch Production Systems," Operations Research, INFORMS, vol. 34(1), pages 91-104, February.
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    Cited by:

    1. Ki Ling Cheung & Warren H. Hausman, 2000. "An Exact Performance Evaluation for the Supplier in a Two-Echelon Inventory System," Operations Research, INFORMS, vol. 48(4), pages 646-653, August.
    2. Gérard P. Cachon, 2001. "Exact Evaluation of Batch-Ordering Inventory Policies in Two-Echelon Supply Chains with Periodic Review," Operations Research, INFORMS, vol. 49(1), pages 79-98, February.
    3. Sven Axsäter, 1995. "Approximate evaluation of batch‐ordering policies for a one‐warehouse, N non‐identical retailer system under compound poisson demand," Naval Research Logistics (NRL), John Wiley & Sons, vol. 42(5), pages 807-819, August.
    4. Sven Axsäter, 2000. "Exact Analysis of Continuous Review ( R,Q ) Policies in Two-Echelon Inventory Systems with Compound Poisson Demand," Operations Research, INFORMS, vol. 48(5), pages 686-696, October.
    5. Gérard P. Cachon, 2001. "Stock Wars: Inventory Competition in a Two-Echelon Supply Chain with Multiple Retailers," Operations Research, INFORMS, vol. 49(5), pages 658-674, October.
    6. Markus Ettl & Gerald E. Feigin & Grace Y. Lin & David D. Yao, 2000. "A Supply Network Model with Base-Stock Control and Service Requirements," Operations Research, INFORMS, vol. 48(2), pages 216-232, April.

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