Inventory control problem of a single warehouse and a multi-retailer distrbution system (a case of Chocho Industry)
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Date
2014-10-16
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Abstract
In many distribution systems important cost reductions and/or service improvements may be
achieved by adopting efficient inventory replenishment strategies for all items and facilities
concerned. Such strategies often need to exploit economies of scale that arise e.g. when shipping
full (or close to full) rail loads or truck loads of goods. The latter can often only be achieved
by combining deliveries to distinct locations into efficient routes. These efficiency improvements
and service enhancements clearly require an integrated approach towards various logistical
planning functions; in particular the areas of inventory control and transportation planning need
to be closely coordinated; for example, shipping in smaller quantities and with higher frequency
generally leads to reductions in inventory investments but requires additional transportation
costs. In this thesis we considered distribution systems with a single depot and many
geographically dispersed retailers each of which faces a specific demand process for a given
item. All stock enters the system through the depot from where it is distributed to (some of) the
retailers by a fleet of trucks, combining deliveries into efficient routes. Our objective is to
determine long-term integrated replenishment strategies (i.e., inventory rules and
routing patterns) enabling all retailers to meet their demands while minimizing long-run average system-wide transportation and inventory costs.
We applied Route First Cluster Second approach to determine feasible replenishment strategies
(i.e., inventory rules and routing patterns) minimizing (infinite horizon) long-run average
transportation and inventory costs. A numerical study exhibits the performance of these
heuristics and reduced the distribution cost of the company drastically
Description
A thesis submitted to the Department of Mathematics, Kwame Nkrumah University of Science and Technology in partial fulfillment of the requirement for the award of degree of
Master of Science
Industrial Mathematics, 2013