Shipment Consolidation: Who Pays for It and How Much?

نویسندگان

  • Moshe Dror
  • Bruce C. Hartman
چکیده

Consolidating orders in inventory management increases order size, exploits economy of scale, and potentially lowers costs. But it is not always apparent how to divide up the resulting lower costs. The analysis of cost allocation in different inventory settings has a name and is now referred to as Inventory Games. This work examines collaborative procurement for the EOQ model for multiple items. In this setting, consolidation of shipments with partial sharing of ordering costs produces an inventory game in which costs must be assigned to the individual items. The cost game is not convex in general. When the ordering cost of a combined order comprises a fixed portion plus an item specific portion, and the items have different holding costs and demands, we will show that there is a way to divide the cost equitably whenever a group of items should be ordered on the same schedule – an inseparable set or group. In allocating costs there is always a certain amount of freedom or judgment required. In particular, if there is not enough fixed cost the parts will not form an inseparable set; but even if they do, there is latitude in choosing the costs. So we also explore the question of how much freedom in cost allocation is available for models of the EOQ type. Earlier work on Inventory Games, in a more general stochastic inventory setting, has appeared in the literature starting with papers by Gerchak and Gupta (1991), Robinson (1993), Hartman (1994), and Hartman and Dror (1996). This work is an interesting operational extension of the work of Meca, et al. (2004).

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عنوان ژورنال:
  • Management Science

دوره 53  شماره 

صفحات  -

تاریخ انتشار 2007