Inventory risk pooling strategy for the food distribution network in Korea
by Seung-Chul Oh; Hokey Min; Young-Hyo Ahn
European J. of Industrial Engineering (EJIE), Vol. 15, No. 4, 2021

Abstract: Today's business environments are characterised by the high degree of volatility and risk due to fast changing customer behaviours and increasingly diversified product lines. Since the volatility and risk are often triggered by demand variability, growing efforts are made to control demand variability. One of such efforts includes inventory risk pooling which aims to reduce inventory variability by aggregating customer demand across products, time, and location. The success of inventory risk pooling, however, hinges on its ability to consolidate inventory at the central location of a supply chain network. To help supply chain professionals formulate a wise inventory risk pooling strategy, this paper redesigns a warehouse network in such a way that it increases inventory turnover, reduces the risk of inventory obsolescence/shortage/surplus, allocates inventory to field warehouses closer to highly concentrated customer bases, and centralises inventory stocking locations for the aggregated demand. To solve this complex distribution network redesign problem, we propose a simulation model and test its validity by applying it to an actual distribution problem encountering the consumer packaged goods manufacturer in Korea, which produces and distributes food products. [Received: 14 August 2017; Accepted: 30 June 2020]

Online publication date: Mon, 12-Jul-2021

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the European J. of Industrial Engineering (EJIE):
Login with your Inderscience username and password:

    Username:        Password:         

Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email