AN INFORMATION-BASED MULTIECHELON INVENTORY SYSTEM WITH EMERGENCY ORDERS

In this paper we study a (S-1, S) type multiechelon inventory system w here all the stocking locations have the option to replenish their inv entory through either a normal or a more expensive emergency resupply channel. When ordering a unit, each stocking location decides which ch annel to use based on its inventory level and the remaining leadtimes of the its outstanding orders. We consider the implications of this po licy by developing expressions for the operating characteristics of th e system and describing a procedure for finding the optimal policy par ameters. A numerical study presented in the paper indicates that when alternative resupply modes are available our policy, which incorporate s the information on the remaining leadtimes of the outstanding orders in selecting the resupply mode, can result in considerable cost savin gs when compared to policies which allow a single resupply mode.