The Stochastic Guaranteed Service Model with Recourse for Multi-Echelon Warehouse Management

The Guaranteed Service Model (GSM) computes optimal order-points in multiechelon inventory control under the assumptions that delivery times can be guaranteed and the demand is bounded. Our new Stochastic Guaranteed Service Model (SGSM) with Recourse covers also scenarios that violate these assumpti...

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Bibliographic Details
Published in:Electronic notes in discrete mathematics 2010-08, Vol.36, p.783-790
Main Authors: Rambau, Jörg, Schade, Konrad
Format: Article
Language:English
Subjects:
guaranteed service model
integer linear programming
Multi-echelon inventory control
real-world application
stochastic programming
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Summary:The Guaranteed Service Model (GSM) computes optimal order-points in multiechelon inventory control under the assumptions that delivery times can be guaranteed and the demand is bounded. Our new Stochastic Guaranteed Service Model (SGSM) with Recourse covers also scenarios that violate these assumptions. Simulation experiments on real-world data of a large german car manufacturer show that policies bases on the SGSM dominate GSM-policies in terms of both inventory and recourse cost.
ISSN:1571-0653
1571-0653
DOI:10.1016/j.endm.2010.05.099