In this paper we study a multi-echelon production/distribution system where the retail centers are allowed to replenish their inventory through a normal resupply channel or an expedited resupply channel by incurring an additional cost. An approximation scheme to find the operating characteristics of such systems is developed. The results of a numerical study indicate that significant cost savings can be achieved by using the policy suggested in this paper.
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Aggarwal et al. (1994) studied this question.
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