A decision rule for coordination of inventory and transportation in a two-stage supply chain with alternative supply sources

Publication year: 2011
Source: Computers & Operations Research, Volume 38, Issue 12, December 2011, Pages 1696-1704

İsmail, Çapar , Burak, Ekşioğlu , Joseph, Geunes

This paper deals with a two-stage supply chain that consists of two distribution centers and two retailers. Each member of the supply chain uses a (Q,R) inventory policy, and incurs standard inventory holding and backlog costs, as well as ordering and transportation costs. The distribution centers replenish their inventory from an outside supplier, and the retailers replenish inventory from one of the two distribution centers. When a retailer is ready to replenish its inventory that retailer must decide whether it should replenish from the first or second distribution center. We develop a decision rule that minimizes the total expected cost…