Highlights Coordinated inventory and transportation management of a supply chain is studied. Transportation is outsourced to a third-party logistics company through a contract. Continuous review (Q, S) and periodic review (R, T) policies are compared. Structural properties that aid policy optimization are developed. The settings where a practical periodic policy is also cost efficient are found.
Abstract We consider a one-warehouse N retailers supply chain with stochastic demand. Inventory is managed in-house whereas transportation is outsourced to a 3PL provider. We develop analytical expressions for the operating characteristics under both periodic and continuous joint replenishment policies. We identify the settings where a periodic review policy is comparable to a continuous review one. In our numerical test-bed, the periodic policy performed best in larger supply chains operating with larger trucks. We also observed that if the excess utilization charge is less than 25%, outsourcing becomes beneficial even if outsourcing cost is 25% more than the in-house fleet costs.
Coordinated inventory replenishment and outsourced transportation operations
2014-08-13
16 pages
Aufsatz (Zeitschrift)
Elektronische Ressource
Englisch
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