Universität zu Köln

Tempelmeier, Horst and Bantel, Oliver (2015). Integrated optimization of safety stock and transportation capacity. Eur. J. Oper. Res., 247 (1). S. 101 - 113. AMSTERDAM: ELSEVIER SCIENCE BV. ISSN 1872-6860

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Abstract

In this paper we consider a segment of a supply chain comprising an inventory and a transportation system that cooperate in the fulfillment of stochastic customer orders. The inventory is operated under a discrete time (r, s, q) policy with backorders. The transportation system consists of an in-house transportation capacity which can be extended by costly external transportation capacity (such as a third-party logistics provider). We show that in a system of this kind stock-outs and the resulting accumulation of inventory backorders introduces volatility in the workload of the transportation process. Geunes and Zeng (2001) have shown for a base-stock system, that backordering decreases the variability of transportation orders. Our findings show that in inventory systems with order cycles longer than one period the opposite is true. In both cases, however, inventory decisions and transportation decision must be taken simultaneously. We present a procedure to compute the probability distribution of the number of transportation orders and the resulting excess transportation requirements or rather transportation costs. We show that the increase of transportation costs resulting from a safety stock reduction may offset the change of the inventory costs. This effect may have a significant impact on general optimality statements for multi-echelon inventory systems. (C) 2015 Elsevier B.V. and Association of European Operational Research Societies (EURO) within the International Federation of Operational Research Societies (IFORS). All rights reserved.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Tempelmeier, Horst UNSPECIFIED UNSPECIFIED UNSPECIFIED Bantel, Oliver UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-387006
DOI:	10.1016/j.ejor.2015.05.069
Journal or Publication Title:	Eur. J. Oper. Res.
Volume:	247
Number:	1
Page Range:	S. 101 - 113
Date:	2015
Publisher:	ELSEVIER SCIENCE BV
Place of Publication:	AMSTERDAM
ISSN:	1872-6860
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language INVENTORY SYSTEMS; MODE SELECTION; LEAD TIMES; POLICIES Multiple languages Management; Operations Research & Management Science Multiple languages
URI:	http://kups.ub.uni-koeln.de/id/eprint/38700