Inventory management with advance demand information and flexible shipment consolidation

Abstract In this paper, we study a stochastic single-item, single-stage inventory system, in which orders from several production facilities are placed at one warehouse. An ( R , Q ) policy is applied to control the warehouse, and arrive according Poisson process include due date such that some information about future demand available. This advance (ADI) can be used adapt time-based shipment consolidation replenish stock facilities. We develop model incorporate flexible deliveries, indicating shipped before their if sufficient reserved transportation capacity derive analytical, approximate expressions for expected costs therefore enable evaluation of different policies including outbound capacities. additionally show how compute optimal parameters conduct detailed numerical study. Our computational experiments indicate our approximation works extremely well, with an average total cost deviation 0.20%, finds more than 90% instances. line existing research, ADI leads large reductions. However, main cause reduction delivery option. To able completely utilize option, even larger safety stocks obtained compared systems without ADI, but savings efficient far exceed increase higher stocks.