Service rate improvement for a three-echelon supply chain system

Document Type

Conference Proceeding

Publication Date

1-1-2012

Abstract

The purpose of this research is to develop replenishment policies for a tree-type three-echelon supply chain system with allowable backorders. The supply chain network considered here is composed of a producer, multiple distributors, and multiple retailers. This research attempts to improve service rate of the system by reducing the backorders at the retailers' levels. An inventory model is developed here to simultaneously determine the optimal order quantity and backorders quantity that would lead to an overall minimum total system cost. Specifically, the objective is to develop a model for improvement of service rate (ISR), that minimizes the total inventory system cost, and finds an optimal policy for distributor's delivery cycle time, replenishment quantities and the service rate at the retailer's level. A closed-form procedure determines the optimal solutions to the model. Search procedure is employed to find the optimal/sub-optimal solutions where closed form solutions are not obtainable or to refine the solutions for some integer variables. Numerical examples are given to illustrate the solution procedures.

Publication Source (Journal or Book title)

62nd IIE Annual Conference and Expo 2012

First Page

1644

Last Page

1652

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