Networked Base-Stock Policy for Continuous-Review Goods Distribution Systems with Uncertain Demand

Continuous-review inventory control problem in goods distribution networks is addressed from a control-theoretic perspective. In contrast to the earlier works concentrating on the fundamental serial and parallel-path configurations, a multi-echelon mesh topology network of suppliers, distribution centers, and retailers is considered. The external, uncertain demand may be imposed on any node in the system, not just conveniently selected contact points. The stock replenishment orders are realized with non-negligible delay. A state-space model of the considered class of systems and a new base-stock inventory policy are introduced. The choice of policy parameters for obtaining a high service level with reduced holding costs is discussed. A comparison with the classical base-stock policy is provided.