Journal
TRANSPORTATION RESEARCH PART E-LOGISTICS AND TRANSPORTATION REVIEW
Volume 45, Issue 1, Pages 107-124Publisher
PERGAMON-ELSEVIER SCIENCE LTD
DOI: 10.1016/j.tre.2008.03.003
Keywords
Inventory management; Consolidation effect; Inventory portfolio
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This paper presents a formal analysis of the consolidation effect in a wider perspective. While demonstrating that the stock saving structure depends on the interaction between the coefficient of variation of demand and the ratio between inventory ordering and holding costs, this research indicates that the ratio between the standard deviations of lead time at potential facilities is the key variable for consolidation. Sensitivity analyses are also performed to address common managerial issues, which can arise during the consolidation decision, such as the impact on total costs and the assumption of uncorrelated demands. (C) 2008 Elsevier Ltd. All rights reserved.
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