Abstract
In this paper we present two models for joint stock replenishment and shipment consolidation decisions which arise in the context of vendor managed inventory. Stock replenishment from suppliers or shipment to customers each incurs a lump-sum cost to the vendor. We assume the vendor uses the reorder point, lot-size policy to replenish stock and one of two schemes to dispatch shipment: the time-based and quantity-based consolidation schemes. Under the time-based (quantity-based) scheme, a shipment is dispatched periodically (when a certain quantity of outstanding demand is accumulated). The basic finding is that the quantity-based scheme can outperform the time-based counterpart while the reverse never occurs.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Axsäter, S. (2001). “A Note on Stock Replenishment and Shipment Scheduling for Vendor-Managed Inventory Systems.” Management Science 47(9), 1306–1310.
Bookbinder, J.H. and J.K. Higginson. (2002). “Probabilistic Modeling of Freight Consolidation by Private Carriage.” Transportation Research, Part E - Logistics & Transportation Review 38(5), 305–318.
Cetinkaya, S. and C.-Y. Lee. (2000). “Stock Replenishment and Shipment Scheduling for Vendor Managed Inventory Systems.” Management Science 46(2), 217–232.
Cetinkaya, S., E. Tekin, and C.-Y. Lee. (2002). “A Stochastic Models for Joint Inventory Replenishment and Shipment Release Decisions.” 2nd revision to Management Science, Industrial Engineering Dept., Texas A&M University.
Cetinkaya, S., E. Tekin, and C.-Y. Lee. (2000). “A Stochastic Models for Joint Inventory Replenishment and Shipment Release Decisions.” Presentation, Manufacturing and Service Operations Management (M&SOM) Conference,Ann Arbor, June 26–27.
Chen, F. (2000). “Optimal Policies for Multi-Echelon Inventory Problems with Batch Ordering.” Operations Research 48(3), 376–389.
Chen, Y., T. Wang, and Z. Xu. (2004). “Integrated Inventory Replenishment and Temporal Shipment Consolidation: A Comparison of Quantity-Based and Time-Based (R, Q) Models.” the online companion of this paper. Downloadable from ’http://www.se.cuhk.edu.hk/~yhchen”.
Feng, Y. and B. Xiao. (2000). “A New Algorithm for Computing Optimal (s, S) policies in a stochastic single item/location inventory system.” IIE Transactions 32(11), 1081–1090.
Gallego, G. (1998). “New Bounds and Heuristics for (Q, r) Policies.” Management Science 44(2), 219–233.
Gupta, Y.P. and P.K. Bagchi. (1987). “Inbound Freight Consolidation under Just-in-time Procur-ment: Application of Clearing Models.” Journal of Business Logistics 8(2), 74–94.
Ha, K.H., S. Khasnabis, and G. Jackson. (1988). “Impact of Freight Consolidation on Logistics System Performance.” Journal of Transportation Engineering 114(2), 173-193.
Hadley, G.F. and T.M. Whitin, (1963). Analysis of Inventory Systems. Englewood Cliffs, N.J.: Prentice-Hall.
Higginson, J.K. and J.H. Bookbinder. (1994). “Policy Recommendations for a Shipment Consolidation Program.” Journal of Business Logistics 15(1), 87–112.
Jackson, G.C. (1985). “A Survey of Freight Consolidation Practices.” Journal of Business Logistics 6(1), 13–34.
Minkoff, A.S. (1993). “A Markov Decision Model and Decomposition Heuristics for Dynamic Vehicle Dispatching.” Operations Research 41(1), 77–90.
Zheng, Y.-S. and F. Chen. (1992). “Inventory Policies with Quantized Ordering.” Naval Research Logistics 39, 285–305.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Chen, F.Y., Wang, T. & Xu, T.Z. Integrated Inventory Replenishment and Temporal Shipment Consolidation: A Comparison of Quantity-Based and Time-Based Models. Ann Oper Res 135, 197–210 (2005). https://doi.org/10.1007/s10479-005-6241-9
Issue Date:
DOI: https://doi.org/10.1007/s10479-005-6241-9