A Dynamic Allocation Heuristic of Centralized Safety Stock

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  • 安全在庫の集中とその配分時期の動的決定方法
  • アンゼン ザイコ ノ シュウチュウ ト ソノ ハイブン ジキ ノ ドウテキ ケッテイ ホウホウ

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Abstract

An aborescent inventory system consists of one central depot and m retailers(regional warehouses) is considered. The depot is replenished by outside suppliers regularly with a fixed length of replenishment cycle. When inventory arrives, the depot ships out the bulk of inventories immediately to retailers while keeping system safety stocks at the depot. The remaining safety stock is allocated to proper retailers later, to balance inventories and minimize total stock out. The problems in the allocation are, (1) how to determine the allocation quantity for each retailer, and (2) how to determine allocation instance. Many approaches such as "fair share allocation", "complete redistribution", and "optimal allocation" have been presented for the problem (1), and we adopted "complete redistribution", and optimal allocation" in this research. For problem (2), two approaches can be considered. The first approach is to allocate the safety stock at a fixed instance in each cycle which can minimize average shortages compared to other fixed allocation periods. The second approach analyzes shortages in each cycle, and dynamically determines the allocation instance for each cycle. Obviously, the second approach may yield better performance than the first approach. However, there are two difficulties in the second approach. The first one is that because demand is stochastic, we can not calculate the exact number of future stock out, and consequently are unable to predetermine optimal allocation instance. The traditional dynamic programming technique is also inappropriate for this difficulty, because we can not identify which retailer needs the centralized safety stock to be allocated. To cope with these difficulties, a heuristic for the second approach is proposed in this paper. The proposed heuristic has an indicator to determine immediate allocation, comparing average shortages between immediate allocation and next period allocation. If immediate allocation results in less average shortage, then allocate immediately, and otherwise do not allocate. Average shortage of the proposed approach is compared with the first approach. Computational results show that the proposed heuristic may reduce stock out more than 35% without increasing inventories compared to the first approach. Sensitivity analyses are also presented varying coefficient of variance, cycle length, number of retailers and allocation policy.

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