Multi-Echelon Systems: Structures and Ordering Policies
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So far we have considered a single installation. In practice, though, it is also common to see multi-stage, or multi-echelon, inventory systems, where a number of installations are coupled to each other. For example, when distributing products over large geographical areas, many companies use an inventory system with a central warehouse close to the production facility and a number of local stocking points close to the customers in different areas. Similarly, in production, stocks of raw materials, components, and finished products are coupled to each other. To obtain efficient control of such inventory systems it is necessary to use special methods that take the connection between different stocks into account. In Chaps. 8–10 we will show when and how such methods can be used.