A study of multi-echelon and multi-location inventory system
Richards, F. Russell
Roland, E. F.
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The reorder point and reorder quantity for a multiechelon inventory system consisting of two levels were determined through the use of a mathematical model and a computer simulation was used to verify the results. The main echelon supported two lower echelon stock points and reordered using a continuous review inventory policy. The two lower echelon stock points operated under periodic review policies. The measure of effectiveness used was to minimize total system costs subject to a constraint on the maximum number of back orders per year. The results from the mathematical model were used as input values for the simulation and measures of effectiveness were compared. An alternative procedure was proposed and simulated; and the results of the three products were compared.
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