Analysis of the maximum level policy in a production-distribution system

Publication year: 2011
Source: Computers & Operations Research, Volume 38, Issue 12, December 2011, Pages 1731-1746

Claudia, Archetti , Luca, Bertazzi , Giuseppe, Paletta , M. Grazia, Speranza

We consider a production-distribution system, where a facility produces one commodity which is distributed to a set of retailers by a fleet of vehicles. Each retailer defines a maximum level of the inventory. The production policy, the retailers replenishment policies and the transportation policy have to be determined so as to minimize the total system cost. The overall cost is composed by fixed and variable production costs at the facility, inventory costs at both facility and retailers and routing costs. We study two different types of replenishment policies. The well-known order-up to level (OU) policy, where the quantity shipped to…