Exact evaluation and optimization of integer-ratio policies for stochastic one-warehouse multiple-retailer inventory systems

This paper considers one-warehouse multiple-retailer inventory systems. The retailers are non-identical and face Poisson demand processes. We consider an integer-ratio policy in which each retailer orders in a fixed interval that is either an integer or integer-ratio multiple of the warehouse's reorder interval. Base-stock policy and virtual allocation are assumed. We show that cost evaluations at the retailers are completely separable, leading to a simple approach to develop an optimal integer-ratio policy for a twolevel distribution system with heterogeneous retailers. (c) 2024 Elsevier B.V. All rights are reserved, including those for text and data mining, AI training, and similar technologies.