Analysis of Two-Echelon Inventory System with Direct and Retrial Demands
In this Chapter, the author considers a continuous review inventory system (both perishable and non-perishable) with Markovian demand. The operating policies are (s, S) and (0,M) policy, that is the maximum inventory level at lower echelon is Sand whenever the inventory drops to s, an order for Q(= S - s) units is placed at the same time in the higher echelon, the maximum inventory level is fixed as M(= nQ: n = 1, 2, ….) and has an instantaneous replenishment facility from an abundant supply source. The demands that occur directly to the distribution centre are called direct demands. The arrival process for the direct demand follows Poisson process. The demand process to the retailer node is independent to the direct demand process and follows Poisson process. The demands that occur during stock out period are enter into the orbit of finite size. The joint probability distribution of the inventory level at lower echelon, higher echelon and the number of customer in the orbit is obtained in the steady state case.