• Journal of Korean Society of Industrial and Systems Engineering
• /
• v.38 no.3
• /
• pp.136-148
• /
• 2015

We analyzed the effect of three different types of inventory systems for saving the total cost using simulation on the system where multiple depots and many retailers disperse on the limited area. Three types of inventory systems are single echelon system with inventory exchange and two-echelon system and the variant two-echelon system. Variant two echelon system is the two-echelon system where the inventory transshipmentsare allowed on every two stage inventory echelons. Inventories kept on every retailer are commonly used for all retailers when certain retailer has stock-out. And when all retailers are stock-out, inventories kept on every depot are commonly used for the retailers whose assigned depots are stock-out. These all three systems are simulated with the constraint of service level on wide range of parameter settings. Simulation results show that cost saving effect appear clear for single echelon system and two-echelon system when shortage cost portion and transportation cost portion becomes large respectively irrespective of depot number. Variant two echelon system seems to be superior to two other systems when transportationcost portion becomes very small. But this superiority is not proved in terms of statistics. So we may conclude that the variant two echelon system may be useless with the higher administrative efforts due to frequent inventory exchange. Also we note that the traditional two echelon system becomes inferior to two other systems in terms of statistics when service level becomes high or when demand variance becomes very large. And inventory integration effect that cost becomes saved when depot number decrease, diminishes when transportation cost or stock-out cost increases irrespective of inventory systems.

• Journal of the Korean Operations Research and Management Science Society
• /
• v.30 no.4
• /
• pp.71-81
• /
• 2005

This Paper focuses on the effects of outside competition on an optimal echelon base stock level in a two stage supply chain. This is new in that we have been studying the effects of inside competition within a supply chain up to now. It is known that the optimal echelon base stock level with inside competition within a supply chain is less than the global optimal echelon base stock level without inside competition. This is due to the ' public goods ' nature of inventory. That is, more inventory is better, but one wants the other to invest more, thus resulting in under-investment. However, this phenomenon becomes weaker as outside competition increases. We show that as outside competition becomes stronger, the ' public goods ' effects decrease and the optimal echelon base stock level increases. If the level of competition is sufficiently high, the optimal echelon base stock level goes even higher than the global optimal echelon base stock level. We develop a theoretical model for the analysis and conduct a numerical analysis.

• Journal of the Korean Operations Research and Management Science Society
• /
• v.29 no.3
• /
• pp.111-127
• /
• 2004

We consider a supply chain model with a make-to-order production facility and a single supplier. The model we treat here is a special case of a two-echelon inventory model. Unlike classical two-echelon systems, the demand process at the supplier is affected by production process at the production facility as well as customer order arrival process. In this paper, we address that how the demand variability impacts on the optimal replenishment policy. To this end, we incorporate Erlang and phase-type demand distributions into the model. Formulating the model as a Markov decision problem, we investigate the structure of the optimal replenishment policy. We also implement a sensitivity analysis on the optimal policy and establish its monotonicity with respect to system cost parameters.

• Proceedings of the Korean Operations and Management Science Society Conference
• /
• 2004.05a
• /
• pp.636-647
• /
• 2004

The objective of this paper is to provide an improved reorder decision policy for general multi-echelon distribution systems utilizing the shared stock information. It has been known that traditional reorder policies sometimes show poor performance in distribution systems. Thus, in our previous research we introduced the order risk policy which utilizes the shared stock information more accurately for the 2-echelon distribution system and proved the optimality. However, since the real world supply chain is generally composed with more than 2 echelons, we extend the order risk policy for the general multi-echelon systems. Since the calculation of the exact order risk value for general multi-echelon systems is very complex, we provide two approximation methods for the real-time calculation. Through the computational experiment comparing the order risk policy with the existing policies under various conditions, we show the performance of the order risk policy and analyze the value of the shared stock information varying with the characteristics of the supply chain.

• Proceedings of the Korean Operations and Management Science Society Conference
• /
• 2003.11a
• /
• pp.159-165
• /
• 2003

The objective of this paper is to provide an improved reorder decision policy for general multi-echelon distribution systems utilizing the shared stock information. Since it has been known that traditional reorder policies sometimes show poor performance in distribution systems, in our previous research we introduced the order risk policy which utilizes the shared stock information more accurately f3r the 2-echelon distribution system and proved the optimality. However, since the real world supply chain is generally composed with more than 2 echelons, we extend the order risk policy for the general multi-echelon systems. Since the calculation of the exact order risk value fur general multi-echelon systems is very complex, we provide two approximation methods. Through the computational experiment comparing the order risk policy with the existing policies under various conditions, we show the performance of the order risk policy and analyze the value of the shared stock information varying with the characteristics of the supply chain.

• IE interfaces
• /
• v.17 no.3
• /
• pp.359-374
• /
• 2004

The objective of this paper is to provide an improved reorder decision policy for general multi-echelon distribution systems utilizing the shared stock information. It has been known that traditional reorder policies sometimes show poor performance in distribution systems. Thus, in our previous research we introduced the order risk policy which utilizes the shared stock information more accurately for the 2- echelon distribution system and proved the optimality. However, since the real world supply chain is generally composed with more than 2 echelons, we extend the order risk policy for the general multi-echelon systems. Since the calculation of the exact order risk value for general multi-echelon systems is very complex, we provide two approximation methods for the real-time calculation. Through the computational experiment comparing the order risk policy with the existing policies under various conditions, we show the performance of the order risk policy and analyze the value of the shared stock information varying with the characteristics of the supply chain.

• Journal of Industrial Technology
• /
• v.21 no.B
• /
• pp.37-44
• /
• 2001

Distribution System is considered as the most important part of SCM when the satisfaction of customer demand is considered. This paper focus on the backorder policies for stockout which is occurred in each regional distribution center of two-echelon distribution system facing stochastic demand process. Four concepts for the efficient system operation are suggested. First, at least 30% reduction of stockout is achieved by introduction of 50/25 allocation policy to distribution system. Second, transportation cost and lead-time of backorder are decreased by allowance of internal supply between regional distribution centers. Third, the frequency of emergency supply is minimized by application of Ship-up-to- expected-demand backorder policies. Finally we suggest several effective rules to select multi-internal suppliers. Simulation tests show the efficiency of our backorder policies and enhancement of customer service level.

• Journal of Korean Society of Industrial and Systems Engineering
• /
• v.17 no.32
• /
• pp.113-120
• /
• 1994

This study presents a two level-parallel type inventory systems with one upper level facility in the first echelon and n-lower level facilities in the second echelon. The stocks at the lowest facilities can become unbalanced with the random variations in the demands. This paper deals with the imbalance by considering redistribution and backorder. The system with redistribution and the system with backorder and redistribution are analized. The comparison of two cases shows that the system with redistribution and backorder gives smaller stocks than the system with redistribution.

• Journal of Korean Institute of Industrial Engineers
• /
• v.27 no.3
• /
• pp.226-232
• /
• 2001

This paper presents an efficient method for the problem of determining the spare inventory level of a multi-echelon repairable-item inventory system. We consider the system with two levels of inventory, two levels of service and with a general service time distribution. We propose an algorithm that determines the spare inventory level to satisfy the minimum fill rate with the minimum cost. Experimental results show that the algorithm is accurate and efficient.

• Journal of Korean Society of Industrial and Systems Engineering
• /
• v.13 no.21
• /
• pp.101-110
• /
• 1990

This study presents a two-level inventory distribution system with one-upper level facility(warehouse) in first echelon and n-lower level facilities(stores) in the second echelon. The demand process at the upper level is induced by the aggregated backorder processes of n independently operated lower level facilities in parallel. For the upper level and the lower level we find the decision points and the distribution function of the aggregate backorders from n-stores. Optimal allocation units and expected system profits are obtained. If the product is of great enough importance to the customer, echelon structure will include a shadow installation. Also, this case is analyzed. Numerical examples are presented to illustrate the results for each case.