Fav. Schouten et al., COORDINATED REPLENISHMENT SYSTEMS WITH DISCOUT OPPORTUNITIES, International Journal of Production Research, 32(12), 1994, pp. 2879-2895
Citations number
NO
Categorie Soggetti
Engineering,"Operatione Research & Management Science
In many practical situations, coordination of replenishment orders for
a family of items can lead to considerable cost savings. A well-known
class of strategies for the case where cost savings are due to reduce
d joint ordering costs is the class of can-order strategies. However,
these strategies, which are simple to implement in practice, do not ta
ke discount possibilities into account. We propose a method to incorpo
rate discounts in the framework of can-order strategies. A continuous
review multi-item inventory system is considered with independent comp
ound Poisson demand processes for each of the individual items. Discou
nts are offered by the supplier as a percentage of the total dollar va
lue whenever this value exceeds a given threshold. Starting from the c
an-order strategy as a basic decision rule, we develop a simple heuris
tic to evaluate these discount opportunities. The performance of the c
an-order strategy with discount evaluation is compared with that of an
other class of discount evaluation rules as proposed by Miltenburg and
Silver.