Analysis of Two-Commodity Continuous Review Inventory System in Supply Chain

Abstract

Abstract: This paper considers a two commodity continuous review inventory system. Continuous review inventory control of a single item at a single location had been considered by many researchers in past. We extend this inventory control strategy to two-echelon system, which is a building block for serial supply chain. The inventory control system consists of two warehouse (WHi), Two Distribution Centre’s (DCi) each associated with a retailer and handling two non-identical products. A (s, S) type inventory system with Poisson demand and exponentially distributed lead times is assumed at retailer node. The items are supplied to the retailers in packs of Qi (= Si-si) items from the distribution center (DCi) which has instantaneous replenishment facility from an abundant source (manufacturer). The steady state probability distribution and the operating characteristics are obtained explicitly. The measures of system performance in the steady state are obtained. The results are illustrated with numerical examples.