Multi-echelon Inventory Models

Abstract

This chapter describes a hierarchical, multilocation inventory system called “multi-echelon” inventory system in which the stock is located at multiple locations but belongs to the same system. In such a case an integrated approach is necessary instead of treating each location of inventory in an autonomous manner. Multi-echelon systems are complex in nature and will require to address the strategic, tactical, and operational issues, which may be difficult to be incorporated in a single model. Nested models combining a number of models might become necessary. A base stock control policy with simultaneous transmission of demand data to higher echelon can effectively handle the situation. A multi-echelon repair-inventory system has been described for recoverable items called as METRIC and MOD-METRIC.