Title: Integrated versus individual approach in products distribution networks

Authors: Lamia Triqui-Sari; Jean-Claude Hennet; Zaki Sari

Addresses: CNRS, ENSAM, Aix Marseille University, Toulon University, LSIS UMR 7296, 13397, Marseille, France; Manufacturing Laboratory, Engineering Sciences Department, Aboubekr Belkaïd University, BP 230, Tlemcen 13000, Algeria ' CNRS, ENSAM, Aix Marseille University, Toulon University, LSIS UMR 7296, 13397, Marseille, France ' Manufacturing Laboratory, Engineering Sciences Department, Aboubekr Belkaïd University, BP 230, Tlemcen 13000, Algeria

Abstract: The purpose of this paper is to compare the effectiveness of two approaches for inventory management in a network of retailers. In the individual approach, each retailer independently orders products from the central warehouse at the beginning of the commercial season, when demand is still uncertain. In the integrated approach, the first stage of ordering from the central warehouse is followed by a process of exchange of products between the retailers once real demands are known with certainty. In terms of modelling and methodology, the basic newsvendor model specialises in the case of discrete probability distributions. The compound distribution generates scenarios that allow solving the stochastic optimisation problem of expected profit maximisation as a deterministic problem. A real industrial example provides a numerical application in this study. The results indicate that the integrated approach increases the total expected profit of the network. It also improves the service level for customers and the efficiency of transport.

Keywords: logistics; inventory management; supply chain management; SCM; newsvendor model; stochastic optimisation; modelling; integrated approach; individual approach; product distribution networks; retailing; customer service level; transport efficiency.

DOI: 10.1504/IJLSM.2016.079833

International Journal of Logistics Systems and Management, 2016 Vol.25 No.3, pp.408 - 424

Received: 01 Jul 2015
Accepted: 15 Sep 2015
Published online: 17 Oct 2016 *

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