698
Views
14
CrossRef citations to date
0
Altmetric
Original Articles

An empirical examination of the assumptions of the Square Root Law for inventory centralisation and decentralisation

&
Pages 2298-2319 | Received 21 Dec 2014, Accepted 02 Jul 2015, Published online: 07 Aug 2015

References

  • Ashford, M. 1997. “Cases 4 and 5 – Hasbro Europe and Nike: Developing European Logistics Strategy.” In Global Cases in Logistics and Supply Chain Management: Teachers’ Manual, edited by David H. Taylor, 16–23. London: International Thomson Business Press.
  • Axsäter, S. 1990. “Modelling Emergency Lateral Transshipments in Inventory Systems.” Management Science 36 (11): 1329–1338.10.1287/mnsc.36.11.1329
  • Axsäter, S. 1996. “Using the Deterministic EOQ Formula in Stochastic Inventory Control.” Management Science 42 (6): 830–834.10.1287/mnsc.42.6.830
  • Ballou, R. H. 1979. “An Extended Distribution Analysis to Support Marketing and Production Planning.” Journal of Business Logistics 1 (1): 63–75.
  • Ballou, R. H. 1981. “Estimating and Auditing Aggregate Inventory Levels at Multiple Stocking Points.” Journal of Operations Management 1 (3): 143–153.10.1016/0272-6963(81)90017-6
  • Ballou, R. H. 2000. “Evaluating Inventory Management Performance Using a Turnover Curve.” International Journal of Physical Distribution & Logistics Management 30 (1/2): 72–88.
  • Ballou, R. H. 2004. Business Logistics/Supply Chain Management. 5th ed. Upper Saddle River, NJ: Pearson/Prentice Hall.
  • Ballou, R. H. 2005. “Expressing Inventory Control Policy in the Turnover Curve.” Journal of Business Logistics 26 (2): 143–164.10.1002/jbl.2005.26.issue-2
  • Bowersox, D. J., D. J. Closs, and W. L. Cooper. 2002. Supply Chain Logistics Management. New York: McGraw-Hill/Irwin.
  • Bretzke, W.-R., and K. Barkawi. 2013. Sustainable Logistics: Responses to a Global Challenge. New York: Springer.10.1007/978-3-642-34375-9
  • Cachon, G. P., and C. Terwiesch. 2009. Matching Supply with Demand: An Introduction to Operations Management. New York: McGraw-Hill.
  • Caron, F., and G. Marchet. 1996. “The Impact of Inventory Centralization/Decentralization on Safety Stock for Two-echelon Systems.” Journal of Business Logistics 17 (1): 233–257.
  • Chang, P.-L., and C.-T. Lin. 1991. “On the Effect of Centralization on Expected Costs in a Multi-location Newsboy Problem.” The Journal of the Operational Research Society 42 (11): 1025–1030.10.1057/jors.1991.193
  • Chang, P.-L., C.-T. Lin, and P.-D. Shen. 1996. “A Note on Centralized Effect on Expected Costs in a Multi-location Newsboy Problem.” International Journal of Information and Management Sciences 7 (1): 25–31.
  • Chen, M.-S., and C.-T. Lin. 1989. “Effects of Centralization on Expected Costs in a Multi-location Newsboy Problem.” The Journal of the Operational Research Society 40 (6): 597–602.10.1057/jors.1989.97
  • Chopra, S., and P. Meindl. 2007. Supply Chain Management: Strategy, Planning, and Operation. 3rd ed. Upper Saddle River, NJ: Pearson/Prentice Hall.
  • Chung, K.-J. 2013. “The EPQ Model under Conditions of Two Levels of Trade Credit and Limited Storage Capacity in Supply Chain Management.” International Journal of Systems Science 44 (9): 1675–1691.10.1080/00207721.2012.669864
  • Chung, K.-J., and Y.-F. Huang. 2003. “The Optimal Cycle Time for EPQ Inventory Model under Permissible Delay in Payments.” International Journal of Production Economics 84 (3): 307–318.10.1016/S0925-5273(02)00465-6
  • Coyle, J. J., E. J. Bardi, and C. J. Langley. 2003. The Management of Business Logistics: A Supply Chain Perspective. 7th ed. Boston, MA: South-Western/Thomson Learning.
  • Croxton, K. L., and W. Zinn. 2005. “Inventory Considerations in Network Design.” Journal of Business Logistics 26 (1): 149–168.10.1002/jbl.2005.26.issue-1
  • Das, C. 1978. “A Reappraisal of the Square Root Law.” International Journal of Physical Distribution & Logistics Management 8 (6): 331–336.
  • Das, C., and R. Tyagi. 1999. “Effect of Correlated Demands on Safety Stock Centralization: Patterns of Correlation versus Degree of Centralization.” Journal of Business Logistics 20 (1): 205–213.
  • Diks, E. B., and A. G. de Kok. 1996. “Controlling a Divergent 2-echelon Network with Transshipments Using the Consistent Appropriate Share Rationing Policy.” International Journal of Production Economics 45 (1–3): 369–379.10.1016/0925-5273(95)00007-0
  • Dubelaar, C., G. Chow, and P. D. Larson. 2001. “Relationships between Inventory, Sales and Service in a Retail Chain Store Operation.” International Journal of Physical Distribution & Logistics Management 31 (2): 96–108.
  • Eppen, G. D. 1979. “Note – Effects of Centralization on Expected Costs in a Multi-location Newsboy Problem.” Management Science 25 (5): 498–501.10.1287/mnsc.25.5.498
  • Evers, P. T. 1995. “Expanding the Square Root Law: An Analysis of Both Safety and Cycle Stocks.” Logistics and Transportation Review 31 (1): 1–20.
  • Evers, P. T. 1996. “The Impact of Transshipments on Safety Stock Requirements.” Journal of Business Logistics 17 (1): 109–133.
  • Evers, P. T. 1997. “Hidden Benefits of Emergency Transshipments.” Journal of Business Logistics 18 (2): 55–76.
  • Evers, P. T. 1999. “Filling Customer Orders from Multiple Locations: A Comparison of Pooling Methods.” Journal of Business Logistics 20 (1): 121–139.
  • Evers, P. T., and F. J. Beier. 1993. “The Portfolio Effect and Multiple Consolidation Points: A Critical Assessment of the Square Root Law.” Journal of Business Logistics 14 (2): 109–125.
  • Evers, P. T., and F. J. Beier. 1998. “Operational Aspects of Inventory Consolidation Decision Making.” Journal of Business Logistics 19 (1): 173–189.
  • Gable, G. G. 1994. “Integrating Case Study and Survey Research Methods: An Example in Information Systems.” European Journal of Information Systems 3 (2): 112–126.10.1057/ejis.1994.12
  • Gattiker, T. F., and D. L. Goodhue. 2002. “Software-driven Changes to Business Processes: An Empirical Study of Impacts of Enterprise Resource Planning (ERP) Systems at the Local Level.” International Journal of Production Research 40 (18): 4799–4814.
  • Gerchak, Y., and Q.-M. He. 2003. “On the Relation between the Benefits of Risk Pooling and the Variability of Demand.” IIE Transactions 35 (11): 1027–1031.10.1080/07408170304399
  • Grahovac, J., and A. Chakravarty. 2001. “Sharing and Lateral Transshipment of Inventory in a Supply Chain with Expensive Low-demand Items.” Management Science 47 (4): 580–594.
  • Hammel, T., T. Phelps, and D. Kuettner. 2002. “The Re‐engineering of Hewlett‐Packard’s CD‐RW Supply Chain.” Supply Chain Management: An International Journal 7 (3): 113–118.10.1108/13598540210436559
  • Herron, D. P. 1987. “Integrated Inventory Management.” Journal of Business Logistics 8 (1): 96–116.
  • Heskett, J. L., N. A. Glaskowsky Jr., and R. M. Ivie. 1974. Business Logistics: Physical Distribution and Materials Management. 2nd ed. New York: Ronald Press.
  • Hill, A. V. 2012. The Encyclopedia of Operations Management: A Field Manual and Glossary of Operations Management Terms and Concepts. Upper Saddle River, NJ: Financial Times Press/Pearson.
  • Hong, S. K., and M. J. Schniederjans. 2000. “Balancing Concurrent Engineering Environmental Factors for Improved Product Development Performance.” International Journal of Production Research 38 (8): 1779–1800.10.1080/002075400188591
  • Hu, J., E. Watson, and H. Schneider. 2005. “Approximate Solutions for Multi-location Inventory Systems with Transshipments.” International Journal of Production Economics 97 (1): 31–43.10.1016/j.ijpe.2004.05.003
  • Jönsson, H., and E. A. Silver. 1987. “Analysis of a Two-echelon Inventory Control System with Complete Redistribution.” Management Science 33 (2): 215–227.10.1287/mnsc.33.2.215
  • Kotler, P., and K. L. Keller. 2012. Marketing Management. 14th ed. Upper Saddle River, NJ: Prentice Hall.
  • Kurata, H. 2014. “How Does Inventory Pooling Work When Product Availability Influences Customers’ Purchasing Decisions?” International Journal of Production Research 52 (22): 6739–6759.10.1080/00207543.2014.916825
  • Lee, H. L., and S. Nahmias. 1993. “Chapter 1: Single-product, Single-location Models.” In Logistics of Production and Inventory, edited by S. C. Graves, A. H. G. Rinnooy Kan, and P. H. Zipkin, 3–56. Amsterdam: Elsevier.
  • Lovell, A., R. Saw, and P. Vermeulen. 2005. “Sony’s Vision: Sales up 80%, Inventory down 80%.” Logistics & Transport Focus 7 (5): 40–44.
  • Mahmoud, M. M. 1992. “Optimal Inventory Consolidation Schemes: A Portfolio Effects Analysis.” Journal of Business Logistics 13 (1): 193–214.
  • Maister, D. H. 1976. “Centralisation of Inventories and the ‘Square Root Law’.” International Journal of Physical Distribution & Logistics Management 6 (3): 124–134.
  • McKinnon, A. C. 1989. Physical Distribution Systems. London: Routledge.
  • McKinnon, A. C. 1997. “Case 16 – Scottish Brewers: The Restructuring of a Depot System.” In Global Cases in Logistics and Supply Chain Management: Teachers’ Manual, edited by D. H. Taylor, 78–83. London: International Thomson Business Press.
  • McKinnon, A. C. 2003. “The Effects of Transport Investment on Logistical Efficiency.” Edinburgh: Heriot-Watt University, Logistics Research Centre. http://www.sml.hw.ac.uk/downloads/logisticsresearchcentre/congestion-reliability/McKinnon-TSUOxford.pdf.
  • Min, W., and L. Pheng. 2005. “Economic Order Quantity (EOQ) versus Just-In-Time (JIT) Purchasing: An Alternative Analysis in the Ready-mixed Concrete Industry.” Construction Management and Economics 23 (4): 409–422.
  • Moran, T. J., and J. Stevens. 2012. “A Simulation Study of Economic Production Quantity Lot Size to Kanban for a Single Line Production System under Various Setup times with Average Work in Process (WIP) Inventory Cost as Performance Metric.” Journal of Business & Economics Research (JBER) 10 (4): 217–224.
  • Narus, J. A., and J. C. Anderson. 1996. “Rethinking Distribution: Adaptive Channels.” Harvard Business Review 74 (4): 112–120.
  • Newson, P. L. 1978. The Future Role of Depots in a Distribution Network. London: Post Office.
  • Osteryoung, J. S., E. Nosari, D. E. McCarty, and W. J. Reinhart. 1986. “Use of the EOQ Model for Inventory Analysis.” Production & Inventory Management 27 (3): 39–46.
  • Özsen, R. 2014. Order Expediting in Supply Chains: Models, Solution Approaches, and Applications. Münster: LIT Verlag.
  • Pan, A. C., and C.-J. Liao. 1989. “An Inventory Model under Just-in-time Purchasing Agreements.” Production & Inventory Management Journal 30 (1): 49–52.
  • Pfohl, H.-C. 1994. Logistikmanagement: Funktionen und Instrumente. Implementierung der Logistikkonzeption in und zwischen Unternehmen [Logistics Management: Functions and Instruments. Implementation of the Logistics Concept in and between Companies]. Berlin: Springer.10.1007/978-3-662-08410-6
  • Pizzolato, N. D., and G. S. V. Guerrero. 1999. “Production Management Practice in a Developing Country: A Case Study.” International Transactions in Operational Research 6 (6): 623–637.
  • Progress Software Corporation. 2007. “Improving the Business Model with Progress Open-Edge®.” http://www.progress.com/progress_software/docs/kingfield_health.pdf.
  • Ronen, D. 1990. “Inventory Centralization/Decentralization – The ‘Square Root Law’ Revisited Again.” Journal of Business Logistics 11 (2): 129–138.
  • Saurin, T. A., G. A. Marodin, and J. L. D. Ribeiro. 2011. “A Framework for Assessing the Use of Lean Production Practices in Manufacturing Cells.” International Journal of Production Research 49 (11): 3211–3230.10.1080/00207543.2010.482567
  • Schwarz, L. B. 1981. “Physical Distribution: The Analysis of Inventory and Location.” A I I E Transactions 13 (2): 138–150.10.1080/05695558108974546
  • Sharma, A., R. Goel, and N. Dua. 2012. “Optimal Policy for EOQ Model with Two Level of Trade Credits in One Replenishment Cycle.” American Journal of Operations Research 2 (1): 51–58.10.4236/ajor.2012.21006
  • Silver, E., D. Pyke, and R. Peterson. 1998. Inventory Management and Production Planning and Scheduling. 3rd ed. New York: Wiley.
  • Simchi-Levi, D., P. Kaminsky, and E. Simchi-Levi. 2008. Designing and Managing the Supply Chain: Concepts, Strategies, and Case Studies. 3rd ed. New York: McGraw-Hill/Irwin.
  • Sipper, D., and R. Bulfin. 1997. Production: Planning, Control, and Integration. New York: McGraw-Hill.
  • Slack, N., S. Chambers, and R. Johnston. 2004. Operations Management. 4th ed. Harlow: Financial Times/Prentice Hall.
  • Statistisches Bundesamt, ed. 2013. Statistisches Jahrbuch 2013 [ Statistical Yearbook 2013]. Wiesbaden: Statistisches Bundesamt.
  • Stulman, A. 1987. “Benefits of Centralized Stocking for the Multi-centre Newsboy Problem with First Come, First Served Allocation.” Journal of the Operational Research Society 38 (9): 827–832.10.1057/jors.1987.136
  • Sussams, J. 1986. “Buffer Stocks and the Square Root Law.” Focus on Physical Distribution and Logistics Management 5 (5): 8–10.
  • Tallon, W. J. 1993. “The Impact of Inventory Centralization on Aggregate Safety Stock: The Variable Supply Lead Time Case.” Journal of Business Logistics 14 (1): 185–203.
  • Tiwari, A., P. Sackett, S. Rehman, and H. Linton. 2008. “Good Operations Practice Supervisor Profiles in Cell-centric Manufacturing.” International Journal of Production Research 46 (15): 4083–4110.10.1080/00207540601161595
  • Tsou, J.-C., and J.-M. Chen. 2005. “Case Study: Quality Improvement Model in a Car Seat Assembly Line.” Production Planning & Control 7 (16): 681–690.
  • Tyagi, R., and C. Das. 1998. “Extension of the Square Root Law for Safety Stock to Demands with Unequal Variances.” Journal of Business Logistics 19 (2): 197–203.
  • Van Wee, B., J. A. Annema, and D. Banister. 2013. The Transport System and Transport Policy: An Introduction. Cheltenham: Edward Elgar.
  • Vastag, G., and S. A. Melnyk. 2002. “Certifying Environmental Management Systems by the ISO 14001 Standards.” International Journal of Production Research 40 (18): 4743–4763.10.1080/00207540210161632
  • Voorhees, R. D., and M. K. Sharp. 1978. “The Principles of Logistics Revisited.” Transportation Journal 18 (1): 69–84.
  • Wanke, P. F. 2009. “Consolidation Effects and Inventory Portfolios.” Transportation Research Part E: Logistics and Transportation Review 45 (1): 107–124.10.1016/j.tre.2008.03.003
  • Wanke, P. F., and E. Saliby. 2009. “Consolidation Effects: Whether and How Inventories Should Be Pooled.” Transportation Research Part E: Logistics and Transportation Review 45 (5): 678–692.10.1016/j.tre.2009.01.006
  • Watson, M., and J. Morton. 2000. “Designing Perfect Distribution Channels: Software Helps Determine Optimal Plan.” Parcel Shipping & Distribution Magazine, April.
  • Woolsey, G. 1988. “A Requiem for the EOQ: An Editorial.” Production & Inventory Management Journal 29 (3): 68–72.
  • Xu, K., P. T. Evers, and M. C. Fu. 2003. “Estimating Customer Service in a Two-location Continuous Review Inventory Model with Emergency Transshipments.” European Journal of Operational Research 145 (3): 569–584.10.1016/S0377-2217(02)00158-3
  • Yang, B., N. D. Burns, and C. J. Backhouse. 2005. “An Empirical Investigation into the Barriers to Postponement.” International Journal of Production Research 43 (5): 991–1005.10.1080/00207540412331316134
  • Yin, R. K. 2011. Applications of Case Study Research. 3rd ed. Thousand Oaks, CA: Sage.
  • Zinn, W., and M. Levy. 1990. “On Assumed Assumptions and the Inventory Centralization/Decentralization Issue.” Journal of Business Logistics 11 (2): 139–142.
  • Zinn, W., M. Levy, and D. J. Bowersox. 1989. “Measuring the Effect of Inventory Centralization/Decentralization on Aggregate Safety Stock: The ‘Square Root Law’ Revisited.” Journal of Business Logistics 10 (1): 1–14.

Reprints and Corporate Permissions

Please note: Selecting permissions does not provide access to the full text of the article, please see our help page How do I view content?

To request a reprint or corporate permissions for this article, please click on the relevant link below:

Academic Permissions

Please note: Selecting permissions does not provide access to the full text of the article, please see our help page How do I view content?

Obtain permissions instantly via Rightslink by clicking on the button below:

If you are unable to obtain permissions via Rightslink, please complete and submit this Permissions form. For more information, please visit our Permissions help page.