An inventory system with single distributor and multiple retailers: Operating scenarios and performance comparison

Abstract

We consider a single-distributor multi-retailer inventory system in six operating scenarios for a finite horizon. Five scenarios are in decentralized control and the other one is in centralized control. Approximate dynamic programming (ADP) procedures are developed to obtain system performances for scenarios in decentralized control, and a stochastic dynamic programming approach is applied to the scenario in centralized control. The efficiency and effectiveness of ADP procedures are demonstrated by numerical results. Taking the system performance in centralized control as a benchmark, system performances in decentralized control are investigated and compared for different operating scenarios. The results provide useful insights in system planning and operations. © 2010 Elsevier B.V.All rights reserved.