In many practical applications of multi-item inventory systems significant economies of scale can be exploited when coordinating replenishment orders for groups of items. This paper considers a continuous review multi-item inventory system with compound Poisson demand processes; excess demands are backlogged and each replenishment requires a lead time. There is a major setup cost associated with any replenishment of the family of items, and a minor (item dependent) setup cost when including a particular item in this replenishment. Moreover there are holding and penalty costs. We present an algorithm which searches for a simple coordinated control rule minimizing the long-run average cost per unit time subject to a service level constraint per item on the fraction of demand satisfied directly from on-hand inventory. This algorithm is based on a heuristic decomposition procedure and a specialized policy-iteration method to solve the single-item subproblems generated by the decomposition procedure. The model applies to multi-location inventory systems with similar cost structures for coordinated deliveries.
Federgruen, Awi, H. Groenevelt, and H. C. Tijms. "Coordinated replenishments in a multi-item inventory system with compound Poisson demands." Management Science 30, no. 3 (March 1984): 344-357.
Each author name for a Columbia Business School faculty member is linked to a faculty research page, which lists additional publications by that faculty member.
Each topic is linked to an index of publications on that topic.