OPTIMAL POWER-OF-2 REPLENISHMENT STRATEGIES IN CAPACITATED GENERAL PRODUCTION DISTRIBUTION NETWORKS

In this paper we develop a model for a capacitated production/distribu tion network of general (but acyclic) topology with a general bill of materials, as considered in MRP (Material Requirement Planning) or DRP (Distribution Requirement Planning) systems. This model assumes stati onary, deterministic demand rates and a standard stationary cost struc ture; it is a generalization of the uncapacitated model treated in the seminal papers of Maxwell and Muckstadt (1985) and Roundy (1986). The capacity constraints consist of bounds on the frequency with which in dividual items can or need to be replenished. We derive a pair of simp le and efficient algorithms capable of determining an optimal power-of -two policy. These algorithms consist of a limited number of maximum f low computations in networks closely related to the production/distrib ution network. The complexity of these algorithms, even when applied t o the uncapacitated model, compares favorably with that of the existin g alternative solution methods.