Replenishment policy for one vendor multi-customer scenario using hierarchical distribution model with backorder

Abstract

In recent years, many researchers have been paying more attention to improving the supply chain system owing to the high potential for creating cost savings. The supply chain network considered in this study is a hierarchical, three-echelon single producer, multiple distributor, and multiple retailer system. The objective of this paper is to develop a replenishment policy that satisfies customers' demand and minimizes the total production-inventory system cost. A hierarchical three-echelon (producer, distributor and retailers) distribution model with end customers' backorders at retailer level is developed. A numerical example and related sensitivity analysis are presented to demonstrate the effectiveness of the model.

Keywords:

• inventory
• supply chain
• back order
• vendor
• customer