Finding Reorder Point in an Inventory System with Shared Information

In this paper we consider an inventory system consistering of a product, one supplier and M indentical retailers, Each retailer applies a (R,Q) polisy. Transit times are constant and retailers face independent poisson demand. The supplier utilizes retailers information in decision making for replenishment policy with a given order size. the supplier starts with m initial batches (of size Q), and places an order in a batch of size Q to an outside source immediately after a retailer’s inventory position reaches R=s. In this inventory system, excess demand is backordered, delayed retailers orders are satisfied on a FCFS basis and no partial shipment is allowed. in this paper, we develop the proposed cost function of this system by considering two order costs at each retailer and the supplier. then, an upper and lower bound for R in this system are determined. for revealing the computational efficiency of the above suggested upper and lower bounds, we resort to solving several numerical examples.

Keywords:

Two-level inventory system , Information sharing , Continuous review , Bounds , Order cost , Poisson demand , Backordered demand