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Evaluation of a joint replenishment policy with sales-based threshold and stochastic demand
Wan, Guangyu1,2; Cao, Yu3; Wang, Shouyang4,5
2022-10-01
Source PublicationCOMPUTERS & INDUSTRIAL ENGINEERING
ISSN0360-8352
Volume172Pages:11
AbstractIn this study, we consider a stochastic joint replenishment problem with Poisson demand, where multiple items are replenished jointly through a common supplier. We study a novel type of joint replenishment policy controlled by a sales threshold, under which new orders are placed to restore every item's inventory position to a base-stock level when the system's accumulated sales generated since the last order reach a certain threshold. The sales threshold enables our model to capture multiple items' value heterogeneity that has been ignored by the quantity-based threshold in traditional joint replenishment control policy. We first characterize the inventory dynamics of the joint replenishment model by the semi-Markov chain method and then provide an approach to evaluate the exact long-run average system inventory-related costs. We further provide an approach to optimize the joint replenishment policy. Numerical experiments are conducted to compare the sales-based threshold policy with the traditional quantity-based threshold policy. Our results show that the sales-based threshold policy can significantly outperform the quantity-based threshold policy, especially for a system with a high holding cost rate, short lead time, low fixed ordering cost, and large heterogeneity among products. This is because the sales-based threshold adds an extra dimension to differentiate the products in addition to the use of different stock levels for multiple items. Our results help practitioners understand the underlying factors that drive the effectiveness of the sales-based threshold policy.
KeywordInventory control Cost evaluation Joint replenishment problem Sales-based threshold Semi-Markov chain
DOI10.1016/j.cie.2022.108525
Indexed BySCI
Language英语
Funding ProjectNational Natural Science Foun-dation of China ; Natural Science Foun-dation of Hunan Province ; Leading Project of Hunan Science and Technology Innovation Talents Program ; [71972182,71802076] ; [2020JJ2051,2022JJ30176] ; [2021RC4007]
WOS Research AreaComputer Science ; Engineering
WOS SubjectComputer Science, Interdisciplinary Applications ; Engineering, Industrial
WOS IDWOS:000891311800014
PublisherPERGAMON-ELSEVIER SCIENCE LTD
Citation statistics
Document Type期刊论文
Identifierhttp://ir.amss.ac.cn/handle/2S8OKBNM/60544
Collection中国科学院数学与系统科学研究院
Corresponding AuthorCao, Yu
Affiliation1.Hunan Univ, Sch Econ & Trade, Changsha 410082, Peoples R China
2.Chinese Acad Sci, Acad Math & Syst Sci, Beijing 100190, Peoples R China
3.Cent South Univ, Business Sch, Changsha 410083, Peoples R China
4.Univ Chinese Acad Sci, Sch Econ & Management, Beijing 100190, Peoples R China
5.Chinese Acad Sci, Ctr Forecasting Sci, Beijing 100190, Peoples R China
Recommended Citation
GB/T 7714
Wan, Guangyu,Cao, Yu,Wang, Shouyang. Evaluation of a joint replenishment policy with sales-based threshold and stochastic demand[J]. COMPUTERS & INDUSTRIAL ENGINEERING,2022,172:11.
APA Wan, Guangyu,Cao, Yu,&Wang, Shouyang.(2022).Evaluation of a joint replenishment policy with sales-based threshold and stochastic demand.COMPUTERS & INDUSTRIAL ENGINEERING,172,11.
MLA Wan, Guangyu,et al."Evaluation of a joint replenishment policy with sales-based threshold and stochastic demand".COMPUTERS & INDUSTRIAL ENGINEERING 172(2022):11.
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