An analytical theory of multi-echelon production/distribution systems

L.J.G. Langenhoff, W.H.M. Zijm
1990 Statistica neerlandica (Print)  
In this paper, we study inventory control problems arising in multi-echelon production/distribution chains. In these chains, material is delivered by outside suppliers, proceeds through a number of manufacturing stages, and is distributed finally among a number of local warehouses in order to meet market demand. Each stage requires a fixed leadtime; furthermore, we assume a stochastic, stationary end-item demand process. The problem to balance inventory levels and service degrees can be
more » ... and analyzed by defining appropriate cost functions. Under an average cost criterion, we study the three most important structures arising in multiechelon systems: assembly systems, serial systems and distribution systems. For all three systems, it is possible to prove exact decomposition results which reduce complex multi-dimensional control problems to simple one-dimensional problems. In addition, we establish the optimality of base-stock control policies.
doi:10.1111/j.1467-9574.1990.tb01279.x fatcat:v6noe6lxqvac3b4c5r2uiogwh4