SHERP

Risk-Pooling Effects of Emergency Shippping in a Two-Echelon Distribution System

Cited 0 time in webofscience Cited 0 time in scopus
Authors
Park, Sangwook
Issue Date
2002-06
Publisher
College of Business Administration (경영대학)
Citation
Seoul Journal of Business Vol8(1): 91~101(2002)
Keywords
n-retailer distribution system; base-stock policy; Newsboy problem
Abstract
This paper analyzes the optimal replenishment policy in a one warehouse N-retailer distribution system operating in a periodic-review mode where emergency shipping from a central warehouse or a retailer to an individual customer is allowed to satisfy retailer backorders at the end of the cycle. We show that, under the assumption that it costs the same whether emergency shipping is made by the warehouse or by a retailer, it is optimal that the warehouse carries no inventory. Under the same assumption, the form of the optimal system-replenishment policy is shown to be a base-stock policy, and the necessary and sufficient condition of optimality, which is analogous to that of the Newsboy problem, is presented. The further analysis shows that, with emergency shipping allowed, the warehouse orders less from its supplier.This paper analyzes the optimal replenishment policy in a one warehouse N-retailer distribution system operating in a periodic-review mode where emergency shipping from a central warehouse or a retailer to an individual customer is allowed to satisfy retailer backorders at the end of the cycle. We show that, under the assumption that it costs the same whether emergency shipping is made by the warehouse or by a retailer, it is optimal that the warehouse carries no inventory. Under the same assumption, the form of the optimal system-replenishment policy is shown to be a base-stock policy, and the necessary and sufficient condition of optimality, which is analogous to that of the Newsboy problem, is presented. The further analysis shows that, with emergency shipping allowed, the warehouse orders less from its supplier.
ISSN
1226-9816
Language
English
URI
http://hdl.handle.net/10371/1655
Files in This Item:
Appears in Collections:
College of Business Administration/Business School (경영대학/대학원)Dept. of Business Administration (경영학과)Seoul Journal of BusinessSeoul Journal of Business Volume 08, Number 1 (2002)
  • mendeley

Items in S-Space are protected by copyright, with all rights reserved, unless otherwise indicated.

Browse