Distribution network dynamics with correlated demands

Distribution network design

VAR demand

Correlated demand

2009

.Conference paper

16th EurOMA Annual Conference, 14th-17th June, Goteborg, SWEDEN, 10 pages.

Author

P. Ratanachote, S.M. Disney

Published

June 14, 2009

Preprint Cite

Abstract

We compare centralised and decentralised distribution network designs for a two-level supply chain. The demand pattern faced by the retailers is modelled as a first-order Vector Auto-Regressive process, which is used to represent the progression of and relationship in sets of time series. All participants, i.e. retailers and distribution centres, operate an Order-Up-To policy with the MMSE forecasting. Inventory and capacity costs are considered. The result shows that the demand correlation has a significant impact on decision about consolidation of the distribution system.