Optimal and heuristic base-stock levels and rationing policy for a divergent supply chain
by Brijesh Paul, Chandrasekharan Rajendran
International Journal of Industrial and Systems Engineering (IJISE), Vol. 5, No. 4, 2010

Abstract: A critical problem often faced by distribution centres that hold finished-good inventory is inventory rationing. A rationing problem arises when the available resources cannot satisfy all demand, indicating a shortage at the distribution centre. We consider a divergent two-stage supply chain with one distributor and four retailers. Retailers face external demand, and they in turn place the replenishment demand to the distributor. The unsatisfied demand is assumed to be backlogged at both distributor's and retailer's ends. Our study focuses on determining a rationing policy and base-stock levels (assuming order-up-to level policy), where the available stock at the distributor is rationed among the successors (i.e. retailers) in case of shortage, with the objective of minimising total holding and backlog costs in the supply chain. We present a mathematical programming model, which can give optimal solutions in the class of base-stock policy, and a genetic algorithm-based heuristic methodology for determining the base-stock levels and rationing fractions.

Online publication date: Wed, 05-May-2010

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

 
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Industrial and Systems Engineering (IJISE):
Login with your Inderscience username and password:

Username:        Password:          Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email subs@inderscience.com