Order splitting under periodic review inventory systems

Most research on order splitting have focused on the reduction of safety st ock in the multiple sourcing setting. Moreover, all works study the use of order splitting for the continuous review inventory systems. In this paper, we investigate the possibility of the multiple-delivery arrangement in the sole sourcing environment. In addition, we concentrate on the reduction of cycle stock for periodic review systems. We show that splitting an order i nto multiple deliveries can significantly reduce the total cost especially if the cost of despatching an order for an item is not small. Although the use of information technology such as EDI decreases the ordering cost and t hus shortens the period length, order splitting remains a cost-effective ap proach as long as the cost of despatching an order is not close to zero. (C ) 2001 Elsevier Science B.V. All rights reserved.