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Joint Replenishment Problem for Single Buyer and Single Supplier System Having the Stochastic Demands  

Jeong, Won-Chan (한양대학교 산업경영공학과)
Kim, Jong-Soo (한양대학교 산업경영공학과)
Publication Information
Journal of the Korean Operations Research and Management Science Society / v.36, no.3, 2011 , pp. 91-105 More about this Journal
Abstract
In this paper, we analyze a logistic system involving a supplier who produces and delivers multiple types of items and a buyer who receives and sells the products to end customers. The buyer controls the inventory level by replenishing each product item up to a given order-up-to-level to cope with stochastic demand of end customers. In response to the buyer's order, the supplier produces or outsources the ordered item and delivers them at the start of each period. For the system described above, a mathematical model for a single type of item was developed from the buyer's perspective. Based on the model, an efficient method to find the cycle length and safety factor which correspond to a local minimum solution is proposed. This single product model was extended to cover a multiple item situation. From the model, algorithms to decide the base cycle length and order interval of each item were proposed. The results of the computational experiment show that the algorithms were able to determine the global optimum solution for all tested cases within a reasonable amount of time.
Keywords
Joint Replenishment Problem; Stochastic Demand; Optimization;
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