ALLOCATION OF WAREHOUSE INVENTORY WITH ELECTRONIC DATA INTERCHANGE AND FIXED ORDER INTERVALS

This paper considers the problem of allocating warehouse inventory to retailers where retailer orders and the replenishment of warehouse inv entory occur periodically on a fixed schedule. We assume that the ware house and the retailers have the opportunity to exchange demand inform ation through Electronic Data Interchange (EDI). At the warehouse leve l, for instance, the available information on the retailer's demand ma y be utilized in determining the shipment quantities needed to meet th e desired service level to the retailers. Unlike similar models focusi ng primarily on optimizing systems wide performance measures, in this paper we focus on the service level furnished to the retailers by the warehouse. To this end, three different allocation policies are consid ered: static, myopic, and dynamic rules characterizing the impact of a vailable demand information on the resulting service levels. Numerical illustrations exemplify the allocation rules considered. An interesti ng though counter intuitive observation is that the existence of addit ional demand information cannot, a prior, be assumed superior. (C) 199 7 Elsevier Science B.V.