The impact of different demand allocation rules on total stock levels

This manuscript compares two different rules for allocating demands to serving facilities and their impact on total stock levels: the one proposed by Tyagi & Das (1998) and the cross filling practice. The EOQ and the ROP methods are used for setting cycle and safety stocks. Its is demonstrated that the minimization of the consolidated inventory levels within these rules leads to different allocation policies, frequently adopted by companies: one single facility sharing, dedicated facilities and full decentralization. Sensitivity analyses are conducted to identify the most relevant variables accountable for the differences in total stock levels among these three policies. Results suggest different benefit opportunities that may favor one policy to the detriment of the others. A framework synthesizing the findings is presented, so as to help in decision making. Potential impacts in terms of service levels and distribution costs are also evaluated qualitatively.

Bibliographic Details

Main Author:	Wanke,Peter
Format:	Digital revista
Language:	English
Published:	Sociedade Brasileira de Pesquisa Operacional 2010
Online Access:	http://old.scielo.br/scielo.php?script=sci_arttext&pid=S0101-74382010000100003
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