An evaluation of a joint replenishment inventory model with random demands.

Abstract

This paper considers a joint replenishment inventory problem with a continuous-review (S, c, s) policy for the backorder case with Poisson demands and constant procurement lead times. Whenever item i's inventory level hits s(i) (reorder point) or lower it triggers an order so as to raise item i's level to S(i) (order up point). At the same time any other item j with inventory level at-or-below its can-order point c(j): is included in the replenishment. A Poisson demand model with a queueing description of the system's operation is analysed, and comparisions are conducted for joint versus individual orders in the case of multi-item problems, where joint replenishment of several items may reduce setup costs.