Controlling general multi-echelon distribution supply chains with improved reorder decision policy utilizing real-time shared stock information

The objective of this paper is to introduce an improved reorder decision policy for controlling general multi-echelon distribution systems utilizing shared stock information. Since traditional reorder policies sometimes show poor performances when applied to distribution systems, the order risk policy, which utilizes shared stock information more accurately, was developed for the two-echelon distribution system in the previous research. In this paper, the order risk policy is extended to general multi-echelon systems. Since the calculation of the exact order risk for general multi-echelon systems is complex, a practical approximation method is developed. Through computational experiments, the superior performance of the order risk policy, compared to the existing reorder policies, is shown and the value of shared stock information varying with the characteristics of the supply chain is analyzed.