CAN-ORDER POLICY WITH ITEM GROUP IN JOINT REPLENISHMENT PROBLEM

Abstract

In this paper, multi-item inventory management is considered. The associated problem is called the joint replenishment problem (JRP). In this model, warehouse sells multiple items for customer and replenishes items from a supplier. For the replenishing, ordering cost is charged independent on the amount of orders. For this situation, can-order policy is often used. Under a can-order policy, items are ordered when their inventory level drops to or below their re-order level, and other item with an inventory level at or below its can-order level can be included in this order. In this situation, by considering can-order level and grouping the items can reduce ordering cost. In this research, setting of a can-order level and grouping are considered. The main objective in this model is minimizing the number of items lost sales cost, holding cost and ordering cost. In a numerical experiment, inventory movement are simulated.