A new replenishment policy in a two-echelon inventory system with stochastic demand

In this paper we consider a two-echelon inventory system consisting of one central warehouse and a number of nonidentical retailers. The warehouse uses a regular one-for-one policy to replenish its inventory, but the retailers apply a new policy that is each retailer orders one unit to central warehouse in a pre-determined time interval. The most advantage of this policy is that the retailers' orders, which constitute warehouse demand, are deterministic. For this system we show how the inventory costs can be evaluated. By the numerical examples we compare our policy with one-for-one policy.