An Innovative Heuristic in Multi-Item Replenishment Problem for One Warehouse and N Retailers

Yugowati Praharsi,Hui-Ming Wee,Yessica Nataliani

doi:10.9744/jti.16.1.1-8

Abstract

Joint replenishment problem (JRP) is a type of inventory model which aims to minimize the total inventory cost consisting of major ordering cost, minor ordering cost and inventory holding cost. Different from previous papers, this study considers one warehouse, multi items and N retailers. An innovative heuristic approach is developed to solve the problem. In this paper, we consider a multi echelon inventory system and seek to find a balance between the order cost and the inventory holding costs at each installation. The computational results show that the innovative heuristic provides a near exact optimal solution, but is more efficient in terms of the computational time and the iteration number.

Highlights

In recent years, new methods are developed to fulfil customers need in retail business more efficiently
We show the number of problems where both the innovative heuristic and modified quotient provide the same solution
We report for each combination of N and m the average percentages. These results show that the innovative heuristic provides closer solutions to the exact optimal solution than the modified quotient approach

Summary

Introduction

New methods are developed to fulfil customers need in retail business more efficiently. One of the methods is the joint replenishment problem (JRP). JRP is a method to replenish multiitems from a single supplier or warehouse. The JRP consists of major and minor order costs. JRP is divided into two strategies, i.e. direct and indirect grouping. In the direct grouping strategy (DGS), items are classified into different group with each group jointly replenished. In the indirect grouping strategy (IGS), all replenishments occur at constant intervals of a common time period. The IGS outperforms of DGS in higher major ordering cost (Eijs et al [1]). The IGS with strict cycle policy is used where at least one item is ordered at every replenishment opportunity

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Conclusion