The Stochastic Guaranteed Service Model with Recourse for Multi-Echelon Warehouse Management

The Guaranteed Service Model (GSM) computes optimal order-points in multiechelon inventory control under the assumptions that delivery times can be guaranteed and the demand is bounded. Our new Stochastic Guaranteed Service Model (SGSM) with Recourse covers also scenarios that violate these assumptions. Simulation experiments on real-world data of a large german car manufacturer show that policies bases on the SGSM dominate GSM-policies in terms of both inventory and recourse cost.