Replenishment policies for multiple products with compound-Poisson demand that share a common warehouse

Stefan Minner, Edward A. Silver

Research output: Contribution to journalArticlepeer-review

23 Scopus citations

Abstract

The paper addresses the problem of determining replenishment timing and quantities in a multi-product environment where the aggregate level of inventory at any time is limited by the available warehouse capacity. Demands are random following a compound-Poisson process and replenishment lead times are assumed to be negligible. We formulate the problem as a Markov-decision-problem that can be used to solve small problem instances to optimality. For larger problems we suggest several heuristics for setting reorder points and reorder quantities. The performance of the proposed methods is compared in a numerical study which shows that the proposed dynamic heuristic on average gives a better performance than the static counterparts.

Original languageEnglish
Pages (from-to)388-398
Number of pages11
JournalInternational Journal of Production Economics
Volume108
Issue number1-2
DOIs
StatePublished - Jul 2007
Externally publishedYes

Keywords

  • Capacity constraint
  • Compound-Poisson demand
  • Multi-item inventory control

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