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Title: Stochastic vendor-managed-inventory models for inventory replenishment and shipment release decisions

Abstract: In this talk we consider a vendor realizing a sequence of random order arrivals in random sizes from a group of retailers located in a given geographical region. The vendor has the autonomy to hold small orders until an economical dispatch quantity, i.e., outbound load, is consolidated. Consequently, the actual inventory requirements at the vendor are in part determined by the parameters of the shipment-release policy in use. The problem at hand is the simultaneous computation of an optimum order quantity for outbound shipments. This problem is motivated by vendor-owned/vendor-managed inventory practices and third party warehousing/distribution appications where the vendor/third party has some control over the timing and the quantity of the outbound shipment, i.e., re-supply at a downstream supply chain member. We develop renewal-theoretic models that take into account the costs of stock replenishment, inventory carrying, customer waiting, and outbound transportation. We discuss several special cases and extensions of the problem including the case of deterministic demand and implementation of time-based, quantity-based, and hybrid outbound dispatch policies.

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