A Dynamic Distribution Model with Warehouse and Customer Replenishment Requirements

This paper addresses a multiperiod integrated model that plans deliveries to customers based upon inventories (at warehouse and customer locations) and vehicle routes. The model determines replenishment quantities and intervals at the warehouse, and distribution lots and delivery routes at customer locations. We investigate coordination of customer and warehouse replenishment decisions and illustrate their interdependence. Computational experience on randomly generated problems is reported. We show that ordering policy at the warehouse is a function of how goods are distributed to lower echelons and that coordination leads to cost reduction.