• INVENTORY REPLENISHMENT DECISION RULE FOR A TWO-ECHELON INVENTORY SYSTEM WITH VARIOUS DEMAND TRENDS

Abstract

The growing global economy has caused a dramatic shift towards inventory management in recent years. Efficient and effective management of inventory will have a beneficial impact on a company's ability in serving its customers properly and to keep direct and indirect costs low. Too much inventory wastes the capital and increases the risk of obsolete goods. With too little inventory, there is a risk of lost sales, stock outs, and increased direct costs. The objective for a multi echelon inventory model is to coordinate the inventories at the various echelons so as to minimize the total cost associated with the entire multi echelon inventory system. Effective management of inventories at each stage offers a great prospective for increasing system efficiency, customer service level and minimization of total system costs. This paper discusses different models developed for analyzing two-echelon inventory system with linear trend and non-linear trend in the demand. The objective of the paper is to develop two echelon inventory models with time dependent demand with minimization of total inventory relevant cost of the system.