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Control Policies for Multi-echelon Inventory Systems with Stochastic Demand

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Supply Chain Coordination under Uncertainty

Part of the book series: International Handbooks on Information Systems ((INFOSYS))

Abstract

Although supply chain management has become an important management paradigm, the optimal control of a stochastic multi-echelon supply chain inventory system is still largely an open issue. An inventory control policy for such a system has to consider at least three aspects: order coordination, information sharing, and stock or risk pooling. Each aspect can generate significant benefits. Nevertheless, an inventory control policy that can fully optimize system performance on all dimensions, even if it exists, would be very difficult to determine. In this paper, we provide a literature review of inventory control policies for multi-echelon supply chain systems with uncertain demand. We first review generic policies developed by extending the basic inventory control policies at a single location. Subsequently, we discuss the themes of coordinated replenishment and information sharing for multi-echelon inventory systems and review the relevant literature. This framework highlights the key factors that drive the performance of multi-echelon inventory systems and shed lights on directions of future research in this area.

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  1. Nanyang Business School, Nanyang Technological University, Singapore, Singapore, 639798

    Qinan Wang

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Editors and Affiliations

  1. , Business Division, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong SAR, Hong Kong/PR China

    Tsan-Ming Choi

  2. , Department of Logistics and Maritime Stu, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong SAR, Hong Kong/PR China

    T.C. Edwin Cheng

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Wang, Q. (2011). Control Policies for Multi-echelon Inventory Systems with Stochastic Demand. In: Choi, TM., Cheng, T. (eds) Supply Chain Coordination under Uncertainty. International Handbooks on Information Systems. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-19257-9_4

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