Approximate analysis of the delivery splitting model

Abstract

The concept of order splitting has been proposed primarily to enable buyers to obtain substantial inventory savings. In this paper we investigate the order splitting concept from the suppliers point of view, referred to as delivery splitting. We will show that for the supplier considerable cost savings can be obtained by using the concept of delivery splitting, although the motivation and the practical implementation can be different for buyer and supplier. Also we will show that an analytical (although approximative) treatment of the delivery splitting concept is feasible, which brings the concept within reach of practical implementation.

Keywords:

• inventory
• demand management
• order splitting