A new algorithm for one-warehouse multi-retailer systems under stationary nested policy

This study aims at optimally coordinating inventory among all the partners in a supply chain system with a central warehouse and multiple local retailers so as to minimize the average total costs. After reviewing the literature, we found no study proposes an efficient solution approach that guarantees to secure an optimal solution for the one-warehouse multi-retailer lot-sizing problem. A major problem that commonly shares among the solution approaches in the literature is they do not have insights into the optimality structure of the problem. Therefore, this study focuses on performing a full theoretical analysis on the optimality structure and employing theoretical results for deriving an effective search algorithm that is able to obtain an optimal solution for the one-warehouse multi-retailer lot-sizing problem under stationary-nested policy. Based on our random experiments, we demonstrate that our search algorithm out-performs the other heuristic solutions.