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This paper deals with the problem of how to determine, with high reliability, economic levels for the base stock and lead times for production and transportation in integrated production, inventory and distribution systems (IPIDS). This system model has a ‘pull type’ ordering system and is of the three stage tandem type, consisting of manufacturer, wholesaler and retailer. A method is described for fixing ‘base stock’ levels and lead times, when product production and transportation stop, which prevents out of stock and minimizes dead stock at each stock point in the case where product models are changing in the market.
Ishii et al. (Tue,) studied this question.