A control system for coordinated inventory replenishment*

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Abstract
There are frequent occasions where the coordination of replenishment orders for selected groups of items can lead to significant savings in the costs of replenishment. This paper is concerned with a practical procedure for selecting the order-up-to-levels, can-order points and must-order points of a particular coordinated control system. Demand is Foisson and a fixed non-zero replenishment lead time is assumed. Cost comparisons with the best independent control strategy indicate that substantial savings (averaging 18-8% over some 104 examples) are possible through coordination.

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