Base-Stock Policies for Two and Three Stages Serial Inventory Systems with Stochastic Demand and Replenishments

Abstract

In this paper the impact of pure base-stock replenishment policies on performance of multi-echelon supply chain networks is being examined. Specifically, we try to evaluate cycle inventory, service level, fill rate, work in process, given the replenishment policy. Serial supply chain systems are being studied; such inventory systems receive inventories from only one source and send inventories only to one receiver. The demand and the replenishment process are stochastic. The replenishment processes follow the Erlang distribution. The external demand is distributed by pure Poisson process which means that the amount that each customer asks is one unit. The supply network is modeled as continuous Markov processes with discrete states. The structures of the transition matrices of those systems are explored and computational algorithms are developed to generate them for different values of systems parameters. Mat lab software is used for any computation.