A joint replenishment supply model for multi-products grouped by several variables with random and time dependence demand

Abstract

Purpose

This paper aims to propose a supply model of periodic review with joint replenishment for multi-products grouped by several variables with random and time dependence demand.

Design/methodology/approach

The products are grouped by multivariate cluster analysis. The stochastic inventory model describes the random demand of each product, considering the temporal dependency through a generalized autoregressive moving average model. Stochastic programming for the total cost of inventory is obtained considering the expected value of the demand per unit of time.

Findings

The total costs for the products grouped with the proposed model are 6% lower than for the individual inventory policy. The expected shortage units decrease significantly in the proposed grouped model with temporary dependence. In addition, the proposal with temporary dependency has lower costs than when the independent and identically distributed demand is considered.

Originality/value

The proposed policy is exemplified with real-world data from a Chilean hospital, where the products (drugs) are segmented by grouping variables, forming clusters of drugs with homogeneous behavior within the groups and heterogeneous behavior between groups.

Citation

Rojas, F. (2020), "A joint replenishment supply model for multi-products grouped by several variables with random and time dependence demand", Journal of Modelling in Management, Vol. 15 No. 1, pp. 276-296. https://doi.org/10.1108/JM2-03-2019-0061