DIRECT SHIPPING AND THE DYNAMIC SINGLE-DEPOT MULTI-RETAILER INVENTORYSYSTEM/

In this paper we study a single-depot/multi-retailer system with indep endent stochastic stationary demands, linear inventory costs, and back logging at the retailers over an infinite horizon. In addition, we als o consider the transportation cost between the depot and the retailers . Orders are placed each period by the depot. The orders arrive at the depot and are allocated and delivered to the retailers. No inventory is held at the depot. We consider a specific policy of direct shipment s. That is, a lower bound on the long run average cost per period for the system over all order/delivery strategies is developed. The simula ted long term average cost per period of the delivery strategy of dire ct shipping with fully loaded trucks is examined via comparison to the derived lower bound. Simulation studies demonstrate that very good re sults can be achieved by a direct shipping policy. (C) 1997 Elsevier S cience B.V.