The Can-Order Policy for One-Warehouse N-Retailer Inventory System: A Heuristic Approach

  • Varaporn Pukcarnon Chulalongkorn University
  • Paveena Chaovalitwongse Chulalongkorn University
  • Naragain Phumchusri Chulalongkorn University

Downloads

Download data is not yet available.

Abstract

We study an application of the can-order policy in one-warehouse n-retailer inventory system, and propose a heuristic approach for setting the appropriate inventory policy. On the can-order policy, an order is triggered when a retailer's inventory position reaches its must-order level. Then other retailers are examined whether their inventory reaches their can-order level, and if so they are filled by this order as well. Warehouse fulfills all involved retailers' inventory to their order-up-to levels. The can-order policy is not only able to save the total system-wide cost from joint replenishment, but it is also simple to use. Computer simulation is utilized to preliminarily study and to determine the best-known solution. We propose a heuristic approach utilizing decomposition technique, iterative procedure, and golden section search to obtain the satisfying total system-wide cost. This can save our computational time to find the appropriate inventory policy setting. We found that the proposed heuristic approach performs very well with the average cost gap less than 2% comparing to the best-known solution. It also provides satisfactory computational time from the reduced search space. Thus, the can-order policy can be very useful for such system.

View article in other formats
Author Biographies
Varaporn Pukcarnon

Department of Industrial Engineering, Faculty of Engineering, Chulalongkorn University, Bangkok 10330, Thailand

Paveena Chaovalitwongse

Department of Industrial Engineering, Faculty of Engineering, Chulalongkorn University, Bangkok 10330, Thailand

Naragain Phumchusri

Department of Industrial Engineering, Faculty of Engineering, Chulalongkorn University, Bangkok 10330, Thailand

Published
Vol 18 No 4, Oct 16, 2014
How to Cite
V. Pukcarnon, P. Chaovalitwongse, and N. Phumchusri, “The Can-Order Policy for One-Warehouse N-Retailer Inventory System: A Heuristic Approach”, Eng. J., vol. 18, no. 4, pp. 53-72, Oct. 2014.

Authors who publish with Engineering Journal agree to transfer all copyright rights in and to the above work to the Engineering Journal (EJ)'s Editorial Board so that EJ's Editorial Board shall have the right to publish the work for nonprofit use in any media or form. In return, authors retain: (1) all proprietary rights other than copyright; (2) re-use of all or part of the above paper in their other work; (3) right to reproduce or authorize others to reproduce the above paper for authors' personal use or for company use if the source and EJ's copyright notice is indicated, and if the reproduction is not made for the purpose of sale.

Article Statistics
Total PDF downloads: 541