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Cost Effectiveness of Postponed Routing Decisions in a Supply Chain

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Authors
Park, Sangwook
Issue Date
2005
Publisher
College of Business Administration (경영대학)
Citation
Seoul Journal of Business Vol11(2): 29~57(2005)
Keywords
SCM; postponement; dynamic routing
Abstract
This paper examines the cost-reduction effect of “postponed” routing
decisions in a two-echelon supply chain. When a delivery vehicle leaves
the warehouse with system replenishment quantities, it sequentially
makes routing decisions to choose the next retailer to visit. To measure
this effect this paper studies combined vehicle routing and inventoryallocation
policies designed to minimize total expected purchasing,
inventory-holding and backordering cost/period for a one-warehouse Nretailer
“symmetric” distribution system. Using a numerical study, we
demonstrate that optimal dynamic routing and allocation policies can
significantly reduce the inventory-management costs associated with
fixed routing and dynamic allocation in “medium-to-large” customer
demand-variance scenarios.
ISSN
1226-9816
Language
English
URI
http://hdl.handle.net/10371/1834
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College of Business Administration/Business School (경영대학/대학원)Dept. of Business Administration (경영학과)Seoul Journal of BusinessSeoul Journal of Business Volume 11, Number 1/2 (2005)
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