Inventory replenishment

The typical inventory process before just-in-time looked like a saw blade with ups and downs as the material was used and replenished. The goal under that system was to have the inventory replenished before too many back orders had to be made. The order quantity was calculated to adjust the inventory levels so that the customers got the material when they wanted it. This was a balancing process where the hope was that the customers would accept a small back order while the inventory was being restored and to not create a large amount of dissatisfaction in the customer. 

The RFID-based model to overcome the aforementioned deficiencies involves implementing a facility-wide decision-making model that utilizes RFID data coming from tagged inventory items stored in the buffers. The location of each buffer combined with time-stamped tag ID can be used to capture the actual status of each buffer and incoming and outgoing materials, thus inventory replenishment can be carried out in a more efficient manner. 

A different type of dynamic game arises when both players take actions in multiple periods. Since inventory models used in SCM literature often involve inventory replenishment decisions that are made over and over again, multiperiod games should be a logical extension of these inventory models. Two major types of multiple-period games exist without and with time dependence. 

T. Boyaci and G. Gallego. Coordinating pricing and inventory replenishment policies for one wholesaler and one or more geographically dispersed retailers. Interntional Journal of Production Economics, 77 95-111,2002. 

Problems that integrate inventory replenishment decisions across multiple stages of the supply chain. See, among others, Williams (1983), Muckstadt and Roundy (1993), Pyke and Cohen (1994), Bramel et al. (2000), and Boyaci and Gallego (2001). 

Mini-case study You are the new operations manager for the Northeast regional distribution center (RDC) of office supply retailer StapleMax. The distribution center (DC) you mange is located in Carlisle, PA. You have been asked by your new boss, the VP of Logistics, to evaluate inventory replenishment options for a set of stock-keeping units (SKUs)... 

The most downstream supply chain unit observes an external demand, transmitted up on a supply chain as inventory replenishment orders move from one unit to another. It has been observed that substantial information distortion may occur during this transmission. This information distortion, known as the bullwhip effect, appears as an order variance increase as one moves up the supply chain. 

An often employed inter-organizational system in which the particular ERP systems are interconnected is vendor managed inventory (VMl Sahin and Robinson 2002). Here, the supplying firm manages the inventory replenishment independently, based on the stock level at the buyer, without receiving an explicit order from the latter (Zhenxin et al. 2001). 

Moderate mover — modest finished /unfinished inventory. Replenishment on a fixed schedule 50% service level goal. LTC quantities if necessary. This category would principally serve the designer segment plus others as TLC expanded. 

Inefficient inventory replenishment can be major source of cost in a supply chain. Replenishment management determines optimal order quantities to minimize the combined cost of inventory holding and shortages, for individual suppliers and customers. In a supply chain, additional constraints such as the coordination of flows from vendors to distribution centers (DC) and from DC to stores, moderate replenishment decisions. Moreover, replenishment decisions must incorporate orders from multiple channels such as catalogs, and the internet. 

With vendor-managed inventory (VMI), the manufacturer or supplier is responsible for all decisions regarding product inventories at the retailer. As a result, the control of the repleitish-ment decision moves to the manufacturer instead of the retailer. In many instances of VMI, the inventory is owned by the supplier until it is sold by the retailer. VMI requires the retailer to share demand information with the manufacturer to allow it to make inventory replenishment decisions. This helps improve manufacturer forecasts and better match manufacturer production with customer demand. VMI can allow a manufacturer to increase its profits— as well as profits for the entire supply chain—if both retailer and manufacturer margins are considered when making inventory decisions. 

Besides the basics of formalizing inventory replenishment procedures for thousands of SKUs, the two most significant contributions of IT systems can be improved inventory visibility and better coordination in the supply chain. 

Joint operational decisions include inventory replenishment, order placement, order generation, and order delivery. Although supply chain partners synchronize... 

In Sect. 3.2, we review the literature on short life-cycle inventory replenishment. In Sect. 3.3, we formulate the problem in Sect. 3.4, we state our heuristic and establish optimality conditions in Sect. 3.5, we show how to modify the process when customers may return merchandise and in Sect. 3.6, report results on our application. 

Fisher, M.L., Rajaram, K., and Raman, A., Optimizing Inventory Replenishment of Retail Fashion Products, Manufacturing and Service Operations Management, 3, 3, pp. 230-241, Summer 2001. 

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