Efficient inventory management in multi-echelon distribution systems

In this paper, an improved DRP method to schedule multi-echelon distribution network is proposed such that order-quantities and order points are dynamically obtained to meet the demand in just in time concept and minimize the out-of-stock probability. The order scheduling method reflects the dynamic characteristics of inventory level changes in the regional distribution centers and the central distribution center. The experiment has been done with various demand distributions, forecast error distributions and lead times. The proposed method was compared with the traditional DRP-based scheduling methods which use different lot-sizing and order point decision techniques. From the result, it is found that the proposed heuristic method yields preferable lot-sizing schedules.