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International
OPEN ACCESS Journal
Of Modern Engineering Research (IJMER)
| IJMER | ISSN: 2249–6645 | www.ijmer.com| Vol. 5 | Iss.3| Mar. 2015 | 49|
Impact and Dynamics of Centralization in Transportation
Cost of Cement Bag’s Vendor and Retailer
Himanshu Gangwal1
, Vishal Achwal2
1
M.E. Scholar,Production Engineering & Engineering Design
2
Assistant Professor,Department ofMechanicalEngineering
TRUBA college of engineering and Technology, Indore - 452020
I. Introduction
Incrementing evidence suggests the prosperity of most world-class companies is due in grand part to an
adroit management of “inventories, capacity utilization, and arbitrariness in the engenderment environment. Not
surprisingly, these three areas have become the target of major perpetual amelioration efforts in a sizably
voluminous number of western business organizations. However, the fact is that operations research studies
dealing with the interaction of these three factors seem to be more the exception than the rule. The inventory
control has a long time been a very classical OR quandary. Since 1913 with Harris, a great number of OR
researchers have studied this subject. From the available literature, it seems that inventory quandaries have
received less attention in the recent past. However, general difficulties practiced by Finns and budget restrictions
seem to have aroused incipient interest in this field of research”.
The incrementing popularity of management concepts predicated on the cooperation of business along
the supply chain inspirits businesses use current methods for their operational orchestrating. The main feature
expected from contemporary approaches is “to enable the simultaneous analysis of the flow of goods along the
chain at multiple links of the chain. Nowadays, a congruous structure of a distribution system and cull of
distribution and inventory policies affects not only the cost of product supply execution, but additionally
inventory cost and customer accommodation quality. In their efforts to amend the culled characteristics of the
entire or a particular part of the supply chain, the businesses have to solve quandaries which prove much more
involute than in the case of traditional approaches, where a single subject is analyzed only.”
In the case of distribution warehouses, this proportion is even more paramount because the main activity
(the only integrated value) is to receive pallets of items from vendors, stock them and distribute customer orders
containing different items. In integration, with the amelioration in information technology, it becomes possible to
develop implements which can avail managers to handle warehouse and inventory issues more efficiently”.
At all classical levels of decision (strategic, tactical and operational), warehouse managers have to tackle
quandaries which can be divided into two broad classes:
“Warehouse management and inventory management problems”.
“Regarding warehouse management issues, managers have to decide where to assign the products inside
the warehouse. Concerning inventory management, managers must decide which product, and how much of each
product need to be stored in the warehouse. All those decisions are interrelated but are dealt independently. Up to
now, warehouse and inventory issues are handled in a pyramidal top-down approach where the flexibility of
decisions decreases from top to bottom. Strategic decisions are first taken and then engender limits to decisions
ABSTRACT: The goal of many research efforts cognate to supply chain management is to propose
mechanisms to reduce operational costs. Inventory holding and conveyance costs are regarded as the
most paramount operational costs in inventory management. Many researches in supply chain
management only consider the inventory cost as a criterion to decide replenishment policy. In the
replenishment process, in juxtaposition of the inventory cost, the conveyance cost is a major cost factor
which affects the shipment size. Thus in this research work the conveyance cost is additionally considered
to minimize the inventory cost.
Two models are studied: when the retailers make decisions independently i.e. Decentralized decision
model and when the retailers are branches of the same firm i.e. Centralized decision model to determine
the best solution to minimize costs.
Keywords: Supply Chain Management, Operation Research, Economic Order Quantity, Replenishment
Cost, Carrying Cost, Transportation Cost, Total Cost, Total Cost of Retailer, Total Cost of Warehouse,
Decentralized Model, Centralized Model
Impact and Dynamics of Centralization in Transportation Cost
| IJMER | ISSN: 2249–6645 | www.ijmer.com| Vol. 5 | Iss.3| Mar. 2015 | 50|
taken at the tactical and operational levels. For example, once the size and the design of the warehouse are fine-
tuned, these decisions will have to be venerated when replenishment policies have to be designed as well as when
the size of the different warehouse areas has to be optimized. On top of this, decisions taken at each level of the
pyramid are additionally handled independently and sequentially.”
II. List Of Abbreviations
SCM - Supply Chain Management, OR -Operation Research, EOQ - Economic Order Quantity, CR/CR -
Replenishment Cost, CC/CC - Carrying Cost, CT/CT - Transportation Cost, TC - Total Cost, TCr - Total Cost of
Retailer, TCw - Total Cost of Warehouse.
III. Mathematical Model
Each Retailers and warehouse contain a set of control parameters which affect the total inventory cost.
The main object in both centralized and decentralized inventory model is:
Minimize TC= 𝑇𝐶𝑟 + 𝑇𝐶 𝑤
12
𝑟=1
Where,
TCr = Total Cost of Retailers TCw = Total Cost of Warehouse
So total cost of all retailers and a single warehouse is minimized jointly
Notations Used
“In our models the following notations are used”:
Table 1: Notations used in Models
Sr. No. Notations Meaning
1 N Total number of retailers
2 R retailers index (r = 1, 2. . .6)
3 ρ density of retailers (retailers/square km)
4 Qr replenishment ordered quantity in bags of retailer r (bags)
5 QR sum of all replenishment order quantities from retailer 1 to 12
6 Fr, Fw fixed cost of order at the retailers and warehouse (Rs.)
7 Vr, Vw variable purchase cost of item at retailer and warehouse (Rs.)
8 Dr demand quantity of retailer r (bags)
9 dwr
,
dsw traveling distance from warehouse to retailer r and from supplier to
warehouse (km)
10 hr, hw carrying charge in % at retailer r and at the warehouse
11 Lwr
,
Lsw lead-time from warehouse to retailer r and supplier to warehouse (month)
12 S truck capacity (bags)
13 Iw interval between two orders in the warehouse (month)
14 Tw, Ts fixed cost of transportation from warehouse to retailer r and supplier to
warehouse (Rs.)
15 tw, ts variable cost of transportation from warehouse to retailer r and supplier to
warehouse (Rs.)
Impact and Dynamics of Centralization in Transportation Cost
| IJMER | ISSN: 2249–6645 | www.ijmer.com| Vol. 5 | Iss.3| Mar. 2015 | 51|
(A) Decentralized Ordering Optimization
In this section “the warehouse and retailers are considered to be distinct entities making individual
decisions.” The total cost of the warehouse and the each retailer is computed as following:
(a)Retailer model
Here we consider “the case that each retailer determines its own Economic Order Quantity and optimal cost.” We
assume that “the retailer’s costs include transportation costs, the cost of replenishment, and carrying cost.” The
total cost to each retailer is defined as follows:
TCr = CRr + CCr + CTr
The “first term indicates the replenishment cost and can be determined as”: CRr = Fr × D r / Qr
The “second term indicates the carrying cost and can be determined as”:
CCr = (Qr/2 + σrLwr) Vrhr [here, σrLwr = √( Lwr × σr2)]
Finally, “the third term indicates the cost of transportation”:
CTr = [Tw + tw(Qr/S)dwr] × (D r / Qr)
DATA COLLECTION
RETAILERS 1 2 3 4 5 6 7 8 9 10 11 12
DEMAND 1000 800 750 1050 700 900 800 850 900 950 800 750
Mean (Dr) =
1000 + 800 + 750 + 1050 + 700 + 900 + 800 + 850 + 900 + 950 + 800 + 750
12
= 854.166
Var(r2)=
(1000−854)2 + (800−854)2 + (750−854)2 + (1050−854)2 + ……+ (950−854)2 + (800−854)2 + (750−854)2
12
= 10607.67
Table 2: Common data for all Retailers
Sr. No. Notation Value
1 Fixed Cost per order (Fr) 220 Rs.
2 Variable Cost per order (Vr) 150 Rs.
3 Carrying Charge (hr) 1%
4 Fixed Cost of transportation per order (Tw) 1000 Rs.
5 Variable Cost of transportation per order (tw) 180 Rs/ton.
6 Truck Capacity (S) 320 Bags
(1) Retailer 1:
Table 3: Individual data of Retailer 1
Sr. No. Notation Value
1 Lead Time (Lwr) 1 Day i.e.0.03 Month
2 Replenishment order Quantity per order (Qr) 100 Bags
3 Distance between warehouse and retailer (dwr) 163 km
4 Demand Quantity (Dr) 1000 Bags
(a) Replenishment Cost (CR) =
𝐹𝑟𝐷𝑟
𝑄𝑟
=
220×1000
100
= 2200 𝑅𝑠
(b) Carrying Cost (CC) =
𝑄𝑟
2
+ 𝜎𝑟 𝐿 𝑤𝑟 𝑉𝑟ℎ 𝑟
Where 𝜎𝑟 𝐿 𝑤𝑟 = 𝐿 𝑤𝑟 + 𝜎𝑟
2 = 0.03 + 10607.67 = 102.9937
𝐶𝑐 =
100
2
+ 102.9937 150 × 1 = 22949.055 𝑅𝑠
(c) Transportation cost (CT) = 𝑇𝑤 + 𝑡 𝑤
𝑄 𝑟
𝑆
𝑑 𝑤𝑟
𝐷 𝑟
𝑄 𝑟
Impact and Dynamics of Centralization in Transportation Cost
| IJMER | ISSN: 2249–6645 | www.ijmer.com| Vol. 5 | Iss.3| Mar. 2015 | 52|
= 1000 + 180
100
320
163
1000
100
= 101687.5 𝑅𝑠
(d) Total Cost of Retailer 1 = 2200 + 22949.055 + 101687.5 = 126836.555 Rs
Similarly we can find the Total Cost of all Retailer i.e for Retailer 2,3,4,5,6,7,8,9,10,11,12
(2) Retailer 2:
Table 4: Individual data of Retailer 2
Sr. No. Notation Value
1 Lead Time (Lwr) 1 Day i.e.0.03 Month
2 Replenishment order Quantity per order (Qr) 105 Bags
3 Distance between warehouse and retailer (dwr) 160 km
4 Demand Quantity (Dr) 800 Bags
Total Cost of Retailer 2 = CR+CC+CT
= 1676.19 + 23324.055 + 79619.05 = 104619.295 Rs.
Similarly we can find the total cost of Retailers and all the data is listed in the table.
Table 5: Model Evaluation of Decentralized Retailers (in Rs.)
R Fr Vr Lwr S Tw tw Dr Qr dwr CRr CCr CTr TCr
1 220 150 .03 320 1000 180 1000 100 163 2200.00 22949.06 101687.50 126836.56
2 220 150 .03 320 1000 180 800 105 160 1676.19 23324.06 79619.05 104619.29
3 220 150 .03 320 1000 180 750 110 127 1500.00 23699.06 60396.31 85595.37
4 220 150 .03 320 1000 180 1050 100 125 2310.00 22949.06 84328.13 109587.18
5 220 150 .03 320 1000 180 700 95 177 1621.05 22574.06 77062.17 101257.28
6 220 150 .03 320 1000 180 900 110 152 1800.00 23699.06 85131.82 110630.88
7 220 150 .03 320 1000 180 800 90 160 1955.56 22199.06 80888.89 105043.51
8 220 150 .03 320 1000 180 850 100 161 1870.00 22949.06 85478.13 110297.18
9 220 150 .03 320 1000 180 900 90 162 2200.00 22199.06 92012.50 116411.56
10 220 150 .03 320 1000 180 950 110 163 1900.00 23699.06 95739.49 121338.55
11 220 150 .03 320 1000 180 800 105 161 1676.19 23324.06 80069.05 105069.30
12 220 150 .03 320 1000 180 750 95 145 1736.84 22574.06 69066.61 93377.51
- Total 10250 1210 - 22445.83 276138.72 991479.65 1265665.08
Total Decentralized Retailer Cost = 126836.555 + 104619.295 + 85595.365 + 109587.18 + 101257.275 +
110630.875 + 105043.505 + 110297.18 + 92012.5 + 121338.545 + 105069.295 + 93377.505 = 1265665.075 Rs.
(b) Warehouse Model:
“We search for the optimal strategy of the warehouse that will minimize the costs of total inventory cost. Here the
total cost is comprised of replenishment cost, carrying cost, shortage cost, and transportation cost.” Hence, the
total cost of warehouse can be defined as follows:
TCw = CRw + CCw + CTw
here, CRw , CCw and CTw can be determined as follows:
CRw = Fw × No. of orders
CCw = [µ w (Iw+ Lsw)/2 + σw(Iw+ Lsw)] × V w.hw
[here, σw(Iw+ Lsw)= √(Iw+ Lsw) × √(σr2)]
CTw = Ts + ts(µ w.Iw/S)dsw× ( ∑Nr=1 Dr/ QR)
Impact and Dynamics of Centralization in Transportation Cost
| IJMER | ISSN: 2249–6645 | www.ijmer.com| Vol. 5 | Iss.3| Mar. 2015 | 53|
Data Collection:
Table 6: Individual data of Warehouse
Sr. No. Notation Value
1 Fixed Cost per Order (Fw) 200 Rs.
2 Variable Cost per order (Vw) 110 Rs
3 Interval between orders i.e. Review Period (Iw) 20 Days = 0.67 Month
4 Lead Time(Lsw) 1 Day = 0.03 Month
5 Distance from supplier to warehouse (dsw) 25 km
6 Carrying Charge (rw) 1%
7 Truck Capacity (S) 560 Boxes
8 Fixed Cost of transportation per order (Ts) 1500 Rs.
9 Variable Cost of transportation per order (ts) 160 Rs.
Total forecasted demand
𝜇 𝑤 = 𝐷𝑟 = 1000 + 800 + 1050 + 750 + 700 + 750 + 900 + 800 + 850 + 900 + 950 + 800
12
𝑟=1
= 10250 𝑏𝑎𝑔𝑠
Total replenishment quantity
𝑄 𝑅 = 100 + 105 + 110 + 100 + 95 + 110 + 90 + 100 + 90 + 110 + 105 + 95 = 1210 𝑏𝑎𝑔𝑠
Replenishment Cost (CR) = FW × No. of Orders = 200 × 9 = 1800 Rs.
Carrying Cost (CC) =
𝜇 𝑤 𝐼 𝑤 +𝐿 𝑠𝑤
2
+ 𝜎 𝑤 𝐼 𝑤 + 𝐿 𝑠𝑤 𝑉𝑤 ℎ 𝑤
Where
𝜎 𝑤 𝐼 𝑤 + 𝐿 𝑠𝑤 = (𝐼 𝑤 + 𝐿 𝑠𝑤 ) × 𝜎𝑟
2 = 0.67 + 0.03 × 10607.67 = 86.1705
𝐶 𝐶 =
10250 0.67 + 0.03
2
+ 86.1705 110 × 1 = 404103.76
Transportation Cost (CT) = 𝑇𝑠 + 𝑡𝑠
𝜇 𝑤 𝐼 𝑤
𝑆
𝑑 𝑠𝑤
𝐷 𝑟
𝑄 𝑅
12
𝑟=1
= 1500 + 160
10250 ×0.67
560
25 8.4 = 424650 𝑅𝑠.
Total Decentralized warehouse Cost = 1800 + 404103.76 + 424650 = 830553.76 Rs
Total Decentralized Cost = Total Decentralized Retailer Cost + Total Decentralized warehouse Cost
= 1265665.075 + 830553.76 = 2096218.835 Rs.
(B) Centralized Ordering (Collective) Optimization:
A number of different posits have made in the centralized injuctively authorizing model. In the
decentralized injuctively authorizing, it is postulated that “each retailer finds its optimal order quantity, sends it to
the warehouse, and receives it afterward. The main motivation of the centralized authoritatively mandating policy
is to explore whether such a policy leads to a lower total system-wide cost by amending the inventory and
conveyance decisions.”
We propose “a collective form of authoritatively mandating by retailers and plan to minimize the
inventory cost of the retailers and the warehouse jointly. The warehouse observes a sequence of ordinant
dictations from a group of retailers situated in a given region. Ideally, these ordinant dictations should be shipped
immediately. Retailers observe their customers’ demand and then collaborate to explore the optimal joint order
amount and send it to the warehouse. Therefore, the warehouse and the retailers must optimize their decision
variables in a way to reduce the total cost of the system. This denotes that we first find the total cost of the system
(which is the summation of the warehouse and retailers costs) and then endeavor to determine the optimal value
for the joint order size. Each retailer’s costs include conveyance cost, cost of replenishment and carrying cost.”
(a) Retailer Model:
The total cost to each retailer is defined as follows:
TCr = CRr + CCr + CTr
hereCRr , CCr and CTr can be determined as follows:
𝐶 𝑅𝑟 =
𝐹𝑟
𝑄 𝑅
𝐷𝑟
12
𝑟=1
Impact and Dynamics of Centralization in Transportation Cost
| IJMER | ISSN: 2249–6645 | www.ijmer.com| Vol. 5 | Iss.3| Mar. 2015 | 54|
𝐶 𝐶𝑟 =
𝑄 𝑟
2
+ 𝜎𝑟 𝐿 𝑤𝑟 𝑉𝑟 ℎ 𝑟 [here, 𝜎𝑟 𝐿 𝑤𝑟 = 𝐿 𝑤𝑟 × 𝜎𝑟
2 ]
𝐶 𝑇𝑟 = 𝑇𝑤 + 𝑡 𝑤
𝑄 𝑅
𝑆
𝑑 𝑤𝑟 +
𝑁 (1 𝜌)
𝑄 𝑅 𝑆
×
𝐷𝑟
𝑄 𝑅
𝑁
𝑟=1
Data Collection:
Table 7: Collective data of all Retailers
Sr. No. Notation Value
1 Fixed Cost per Order (Fr) 220+220+....+220 = 2640 Rs
2 Variable Cost per Order (Vr) 150 Rs
3 Replenishment Order Quantity (QR) 100+105.......+95 = 1210 bags
4 Lead Time (Lwr) 2 Days i.e. 0.06 Month
5 Carrying charge (hr) 2.5 %
6 Retailers density ( ρ ) 5
7 Truck Capacity (S) 600 bags
8 Fixed Cost of transportation per order (Tw) 2500 Rs
9 Variable Cost of transportation per order (tw) 280 ton
(a) Replenishment Cost 𝐶 𝑅 =
𝐹𝑟
𝑄 𝑅
𝐷𝑟
12
𝑟=1 =
2640 ×10250
1210
= 22363.64 𝑅𝑠.
(b) Carrying Cost 𝐶 𝐶 =
𝑄 𝑟
2
+ 𝜎𝑟 𝐿 𝑤𝑟 𝑉𝑟 ℎ 𝑟
Where 𝜎𝑟 𝐿 𝑤𝑟 = 𝐿 𝑤𝑟 × 𝜎𝑟
2 = 0.06 × 10607.67 = 25.2282
𝐶 𝐶 =
1210
2
+ 25.2282 150 × 2.5 = 236335.58 Rs.
(c) Transportation Cost 𝐶 𝑇 = 𝐶 𝑇𝑟 = 𝑇𝑤 + 𝑡 𝑤
𝑄 𝑅
𝑆
𝑑 𝑤𝑟 +
𝑁 (1 𝜌)
𝑄 𝑅 𝑆
×
𝐷 𝑟
𝑄 𝑅
𝑁
𝑟=1
𝐶 𝑇 = 𝐶 𝑇𝑟 = 2500 + 280
1210
600
79 +
12 (1 5)
1210 600
×
10250
1210
= 399083.6 𝑅𝑠.
(d) Total Centralized Retailer Cost = 22363.64 + 236335.58 + 399083.6 = 657782.82 Rs
(b) Warehouse model:
The total cost to each warehouse is defined as follows:
TCw = CRw + CCw + CTw
hereCRw , CCw and CTw can be determined as follows:
CRw = (Fw / QR) × ∑Nr=1 Dr
CCw = (QR/2 + σwLsw) Vwhw [here, σwLsw = √(Lsw × σr2)]
CTw = [Ts + ts(QR/S)dsw] × ( ∑Nr=1 Dr/ QR)
The goal of centralized ordering model is “to jointly minimize the combined inventorycost of retailers and the
warehouse.”
Data Collection:
Table 8: Collective data of Warehouse
Sr. No. Notation Value
1 Fixed Cost per Order (Fw) 600 Rs
2 Variable Cost per Order (Vw) 500 Rs.
3 Distance from supplier to warehouse (dsw) 25 km
4 Lead Time (Lsw) 2 Days i.e. 0.06 Month
5 Truck Capacity (S) 700 Bags
6 Fixed Cost of transportation per order (α s) 3000 Rs
7 Variable Cost of transportation per order (ts) 350 Rs
Impact and Dynamics of Centralization in Transportation Cost
| IJMER | ISSN: 2249–6645 | www.ijmer.com| Vol. 5 | Iss.3| Mar. 2015 | 55|
(a) Replenishment Cost 𝐶 𝑅 =
𝐹 𝑤
𝑄 𝑅
𝐷𝑟
12
𝑟=1 =
600 ×10250
1210
= 5082.65 𝑅𝑠.
(b) Carrying Cost 𝐶 𝐶 =
𝑄 𝑅
2
+ 𝜎 𝑤 𝐿 𝑠𝑤 𝑉𝑤 ℎ 𝑤
Where 𝜎 𝑤 𝐿 𝑠𝑤 = 𝐿 𝑠𝑤 × 𝜎𝑟
2 = 0.06 × 10607.67 = 25.2282
𝐶 𝐶 =
1210
2
+ 25.2282 500 × 1 = 315114.1 Rs.
(c) Transportation Cost 𝐶 𝑇 = 𝑇𝑠 + 𝑡𝑠
𝑄 𝑅
𝑆
𝑑 𝑠𝑤 ×
𝐷 𝑟
12
𝑟=1
𝑄 𝑅
𝐶 𝑇 = 3000 + 350
1210
700
25
10250
1210
= 153538.22 𝑅𝑠.
(d) Total Centralized Warehouse Cost = 5082.65+315114.1+153538.22 = 473734.97 Rs
Total Centralized Cost = Total centralized Retailer Cost + Total Centralized Warehouse Cost
= 657782.82 + 473734.97 = 1131517.79 Rs.
Difference between Total Decentralized Cost and Total Centralized Cost = 2096218.835 – 1131517.79
= 964701.045 Rs
IV. Conclusion
We have formulated “a multi-level inventory model that includes transportation costs for planning the
replenishment of a single commodity. The conclusion of the research is minimization the total inventory cost
while considering a discrete transportation cost. Finally, development of a collective form of ordering by retailers
and plan to minimize the inventory cost of the retailers and the warehouse jointly.”
Two models are developed considering “the scenarios of centralized ordering and decentralized
ordering. A numerical example was solved for both models. Results indicate that having collaboration among the
retailers and the warehouse or applying a collective ordering strategy results in reduced costs when compared to
the decentralized ordering strategy. Furthermore, it was shown that the transportation cost contains a considerable
percentage of the total cost, while this cost has been usually overlooked.”
The difference between the total cost of decentralized and centralized model is 964701.05 Rs. So, the total
cost is minimized by minimizing the transportation cost.
REFERENCES
[1] Srinivasa Rao Y, Kesava Rao V.V.S.(2012), “Optimal Ordering policies of a Two Echelon Supply Chain for
Deteriorating Items”, International Journal of Computer Applications.
[2] L. M. Bouter (2009), “Service Inventory Management Solution Technique for inventory system without backorders”.
[3] Alexandre Vieira Braga, Marcos Antônio Souza (2012), “Costs, Prices and Results’ Management: A Study Conducted
in Fruit Canning Companies Located in Rio Grande do Sul State, Brazil”, International Business Research.
[4] AnirbanSaha&Arindam Roy (2012), “Multi-item two storage inventory models for breakable items with fuzzy cost
and resources based on different defuzzification techniques”, Operational Research Society of India.
[5] Ching-Fang Lee, Chien-Ping Chung (2012), “An Inventory Model for Deteriorating Items in a Supply Chain with
System Dynamics Analysis”, Science direct.
[6] Wenbin Wang, Michael G. Pecht (2012), “Cost Optimization for Canary-Equipped Electronic Systems in Terms of
Inventory Control and Maintenance Decisions”, IEEE Transactions on Reliability, vol. 61
[7] Armand Baboli, Julien Fondrevelle, Ali Mehrabi (2011), “Canning Companies Located in Rio Grande do Sul State,
Brazil”, International Journal of Advanced Manufacturing Technology.
[8] Reza Shahrjerdi, MohdKhairolAnuar (2011), “An integrated inventory models under cooperative and non-cooperative
seller-buyer and vendor supply chain”, African Journal of Business Management.
[9] NichalinSuakkaphong, Moshe Dror (2011), “Managing decentralized inventory and transshipment”, Sociedad de
Estadística e InvestigaciónOperativa
[10] Mir-BahadorAryanezhad, SeyedGholamrezaJalaliNaini (2011), “An integrated model for designing supply chain
network under demand and supply uncertainty”, African Journal of Business Management.
[11] Armand Baboli& Julien Fondrevelle (2011), “A replenishment policy based on joint optimization in a downstream
pharmaceutical supply chain: centralized vs. decentralized replenishment”, Springer-Verlag London Limited.

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Impact and Dynamics of Centralization in Transportation Cost of Cement Bag’s Vendor and Retailer

  • 1. International OPEN ACCESS Journal Of Modern Engineering Research (IJMER) | IJMER | ISSN: 2249–6645 | www.ijmer.com| Vol. 5 | Iss.3| Mar. 2015 | 49| Impact and Dynamics of Centralization in Transportation Cost of Cement Bag’s Vendor and Retailer Himanshu Gangwal1 , Vishal Achwal2 1 M.E. Scholar,Production Engineering & Engineering Design 2 Assistant Professor,Department ofMechanicalEngineering TRUBA college of engineering and Technology, Indore - 452020 I. Introduction Incrementing evidence suggests the prosperity of most world-class companies is due in grand part to an adroit management of “inventories, capacity utilization, and arbitrariness in the engenderment environment. Not surprisingly, these three areas have become the target of major perpetual amelioration efforts in a sizably voluminous number of western business organizations. However, the fact is that operations research studies dealing with the interaction of these three factors seem to be more the exception than the rule. The inventory control has a long time been a very classical OR quandary. Since 1913 with Harris, a great number of OR researchers have studied this subject. From the available literature, it seems that inventory quandaries have received less attention in the recent past. However, general difficulties practiced by Finns and budget restrictions seem to have aroused incipient interest in this field of research”. The incrementing popularity of management concepts predicated on the cooperation of business along the supply chain inspirits businesses use current methods for their operational orchestrating. The main feature expected from contemporary approaches is “to enable the simultaneous analysis of the flow of goods along the chain at multiple links of the chain. Nowadays, a congruous structure of a distribution system and cull of distribution and inventory policies affects not only the cost of product supply execution, but additionally inventory cost and customer accommodation quality. In their efforts to amend the culled characteristics of the entire or a particular part of the supply chain, the businesses have to solve quandaries which prove much more involute than in the case of traditional approaches, where a single subject is analyzed only.” In the case of distribution warehouses, this proportion is even more paramount because the main activity (the only integrated value) is to receive pallets of items from vendors, stock them and distribute customer orders containing different items. In integration, with the amelioration in information technology, it becomes possible to develop implements which can avail managers to handle warehouse and inventory issues more efficiently”. At all classical levels of decision (strategic, tactical and operational), warehouse managers have to tackle quandaries which can be divided into two broad classes: “Warehouse management and inventory management problems”. “Regarding warehouse management issues, managers have to decide where to assign the products inside the warehouse. Concerning inventory management, managers must decide which product, and how much of each product need to be stored in the warehouse. All those decisions are interrelated but are dealt independently. Up to now, warehouse and inventory issues are handled in a pyramidal top-down approach where the flexibility of decisions decreases from top to bottom. Strategic decisions are first taken and then engender limits to decisions ABSTRACT: The goal of many research efforts cognate to supply chain management is to propose mechanisms to reduce operational costs. Inventory holding and conveyance costs are regarded as the most paramount operational costs in inventory management. Many researches in supply chain management only consider the inventory cost as a criterion to decide replenishment policy. In the replenishment process, in juxtaposition of the inventory cost, the conveyance cost is a major cost factor which affects the shipment size. Thus in this research work the conveyance cost is additionally considered to minimize the inventory cost. Two models are studied: when the retailers make decisions independently i.e. Decentralized decision model and when the retailers are branches of the same firm i.e. Centralized decision model to determine the best solution to minimize costs. Keywords: Supply Chain Management, Operation Research, Economic Order Quantity, Replenishment Cost, Carrying Cost, Transportation Cost, Total Cost, Total Cost of Retailer, Total Cost of Warehouse, Decentralized Model, Centralized Model
  • 2. Impact and Dynamics of Centralization in Transportation Cost | IJMER | ISSN: 2249–6645 | www.ijmer.com| Vol. 5 | Iss.3| Mar. 2015 | 50| taken at the tactical and operational levels. For example, once the size and the design of the warehouse are fine- tuned, these decisions will have to be venerated when replenishment policies have to be designed as well as when the size of the different warehouse areas has to be optimized. On top of this, decisions taken at each level of the pyramid are additionally handled independently and sequentially.” II. List Of Abbreviations SCM - Supply Chain Management, OR -Operation Research, EOQ - Economic Order Quantity, CR/CR - Replenishment Cost, CC/CC - Carrying Cost, CT/CT - Transportation Cost, TC - Total Cost, TCr - Total Cost of Retailer, TCw - Total Cost of Warehouse. III. Mathematical Model Each Retailers and warehouse contain a set of control parameters which affect the total inventory cost. The main object in both centralized and decentralized inventory model is: Minimize TC= 𝑇𝐶𝑟 + 𝑇𝐶 𝑤 12 𝑟=1 Where, TCr = Total Cost of Retailers TCw = Total Cost of Warehouse So total cost of all retailers and a single warehouse is minimized jointly Notations Used “In our models the following notations are used”: Table 1: Notations used in Models Sr. No. Notations Meaning 1 N Total number of retailers 2 R retailers index (r = 1, 2. . .6) 3 ρ density of retailers (retailers/square km) 4 Qr replenishment ordered quantity in bags of retailer r (bags) 5 QR sum of all replenishment order quantities from retailer 1 to 12 6 Fr, Fw fixed cost of order at the retailers and warehouse (Rs.) 7 Vr, Vw variable purchase cost of item at retailer and warehouse (Rs.) 8 Dr demand quantity of retailer r (bags) 9 dwr , dsw traveling distance from warehouse to retailer r and from supplier to warehouse (km) 10 hr, hw carrying charge in % at retailer r and at the warehouse 11 Lwr , Lsw lead-time from warehouse to retailer r and supplier to warehouse (month) 12 S truck capacity (bags) 13 Iw interval between two orders in the warehouse (month) 14 Tw, Ts fixed cost of transportation from warehouse to retailer r and supplier to warehouse (Rs.) 15 tw, ts variable cost of transportation from warehouse to retailer r and supplier to warehouse (Rs.)
  • 3. Impact and Dynamics of Centralization in Transportation Cost | IJMER | ISSN: 2249–6645 | www.ijmer.com| Vol. 5 | Iss.3| Mar. 2015 | 51| (A) Decentralized Ordering Optimization In this section “the warehouse and retailers are considered to be distinct entities making individual decisions.” The total cost of the warehouse and the each retailer is computed as following: (a)Retailer model Here we consider “the case that each retailer determines its own Economic Order Quantity and optimal cost.” We assume that “the retailer’s costs include transportation costs, the cost of replenishment, and carrying cost.” The total cost to each retailer is defined as follows: TCr = CRr + CCr + CTr The “first term indicates the replenishment cost and can be determined as”: CRr = Fr × D r / Qr The “second term indicates the carrying cost and can be determined as”: CCr = (Qr/2 + σrLwr) Vrhr [here, σrLwr = √( Lwr × σr2)] Finally, “the third term indicates the cost of transportation”: CTr = [Tw + tw(Qr/S)dwr] × (D r / Qr) DATA COLLECTION RETAILERS 1 2 3 4 5 6 7 8 9 10 11 12 DEMAND 1000 800 750 1050 700 900 800 850 900 950 800 750 Mean (Dr) = 1000 + 800 + 750 + 1050 + 700 + 900 + 800 + 850 + 900 + 950 + 800 + 750 12 = 854.166 Var(r2)= (1000−854)2 + (800−854)2 + (750−854)2 + (1050−854)2 + ……+ (950−854)2 + (800−854)2 + (750−854)2 12 = 10607.67 Table 2: Common data for all Retailers Sr. No. Notation Value 1 Fixed Cost per order (Fr) 220 Rs. 2 Variable Cost per order (Vr) 150 Rs. 3 Carrying Charge (hr) 1% 4 Fixed Cost of transportation per order (Tw) 1000 Rs. 5 Variable Cost of transportation per order (tw) 180 Rs/ton. 6 Truck Capacity (S) 320 Bags (1) Retailer 1: Table 3: Individual data of Retailer 1 Sr. No. Notation Value 1 Lead Time (Lwr) 1 Day i.e.0.03 Month 2 Replenishment order Quantity per order (Qr) 100 Bags 3 Distance between warehouse and retailer (dwr) 163 km 4 Demand Quantity (Dr) 1000 Bags (a) Replenishment Cost (CR) = 𝐹𝑟𝐷𝑟 𝑄𝑟 = 220×1000 100 = 2200 𝑅𝑠 (b) Carrying Cost (CC) = 𝑄𝑟 2 + 𝜎𝑟 𝐿 𝑤𝑟 𝑉𝑟ℎ 𝑟 Where 𝜎𝑟 𝐿 𝑤𝑟 = 𝐿 𝑤𝑟 + 𝜎𝑟 2 = 0.03 + 10607.67 = 102.9937 𝐶𝑐 = 100 2 + 102.9937 150 × 1 = 22949.055 𝑅𝑠 (c) Transportation cost (CT) = 𝑇𝑤 + 𝑡 𝑤 𝑄 𝑟 𝑆 𝑑 𝑤𝑟 𝐷 𝑟 𝑄 𝑟
  • 4. Impact and Dynamics of Centralization in Transportation Cost | IJMER | ISSN: 2249–6645 | www.ijmer.com| Vol. 5 | Iss.3| Mar. 2015 | 52| = 1000 + 180 100 320 163 1000 100 = 101687.5 𝑅𝑠 (d) Total Cost of Retailer 1 = 2200 + 22949.055 + 101687.5 = 126836.555 Rs Similarly we can find the Total Cost of all Retailer i.e for Retailer 2,3,4,5,6,7,8,9,10,11,12 (2) Retailer 2: Table 4: Individual data of Retailer 2 Sr. No. Notation Value 1 Lead Time (Lwr) 1 Day i.e.0.03 Month 2 Replenishment order Quantity per order (Qr) 105 Bags 3 Distance between warehouse and retailer (dwr) 160 km 4 Demand Quantity (Dr) 800 Bags Total Cost of Retailer 2 = CR+CC+CT = 1676.19 + 23324.055 + 79619.05 = 104619.295 Rs. Similarly we can find the total cost of Retailers and all the data is listed in the table. Table 5: Model Evaluation of Decentralized Retailers (in Rs.) R Fr Vr Lwr S Tw tw Dr Qr dwr CRr CCr CTr TCr 1 220 150 .03 320 1000 180 1000 100 163 2200.00 22949.06 101687.50 126836.56 2 220 150 .03 320 1000 180 800 105 160 1676.19 23324.06 79619.05 104619.29 3 220 150 .03 320 1000 180 750 110 127 1500.00 23699.06 60396.31 85595.37 4 220 150 .03 320 1000 180 1050 100 125 2310.00 22949.06 84328.13 109587.18 5 220 150 .03 320 1000 180 700 95 177 1621.05 22574.06 77062.17 101257.28 6 220 150 .03 320 1000 180 900 110 152 1800.00 23699.06 85131.82 110630.88 7 220 150 .03 320 1000 180 800 90 160 1955.56 22199.06 80888.89 105043.51 8 220 150 .03 320 1000 180 850 100 161 1870.00 22949.06 85478.13 110297.18 9 220 150 .03 320 1000 180 900 90 162 2200.00 22199.06 92012.50 116411.56 10 220 150 .03 320 1000 180 950 110 163 1900.00 23699.06 95739.49 121338.55 11 220 150 .03 320 1000 180 800 105 161 1676.19 23324.06 80069.05 105069.30 12 220 150 .03 320 1000 180 750 95 145 1736.84 22574.06 69066.61 93377.51 - Total 10250 1210 - 22445.83 276138.72 991479.65 1265665.08 Total Decentralized Retailer Cost = 126836.555 + 104619.295 + 85595.365 + 109587.18 + 101257.275 + 110630.875 + 105043.505 + 110297.18 + 92012.5 + 121338.545 + 105069.295 + 93377.505 = 1265665.075 Rs. (b) Warehouse Model: “We search for the optimal strategy of the warehouse that will minimize the costs of total inventory cost. Here the total cost is comprised of replenishment cost, carrying cost, shortage cost, and transportation cost.” Hence, the total cost of warehouse can be defined as follows: TCw = CRw + CCw + CTw here, CRw , CCw and CTw can be determined as follows: CRw = Fw × No. of orders CCw = [µ w (Iw+ Lsw)/2 + σw(Iw+ Lsw)] × V w.hw [here, σw(Iw+ Lsw)= √(Iw+ Lsw) × √(σr2)] CTw = Ts + ts(µ w.Iw/S)dsw× ( ∑Nr=1 Dr/ QR)
  • 5. Impact and Dynamics of Centralization in Transportation Cost | IJMER | ISSN: 2249–6645 | www.ijmer.com| Vol. 5 | Iss.3| Mar. 2015 | 53| Data Collection: Table 6: Individual data of Warehouse Sr. No. Notation Value 1 Fixed Cost per Order (Fw) 200 Rs. 2 Variable Cost per order (Vw) 110 Rs 3 Interval between orders i.e. Review Period (Iw) 20 Days = 0.67 Month 4 Lead Time(Lsw) 1 Day = 0.03 Month 5 Distance from supplier to warehouse (dsw) 25 km 6 Carrying Charge (rw) 1% 7 Truck Capacity (S) 560 Boxes 8 Fixed Cost of transportation per order (Ts) 1500 Rs. 9 Variable Cost of transportation per order (ts) 160 Rs. Total forecasted demand 𝜇 𝑤 = 𝐷𝑟 = 1000 + 800 + 1050 + 750 + 700 + 750 + 900 + 800 + 850 + 900 + 950 + 800 12 𝑟=1 = 10250 𝑏𝑎𝑔𝑠 Total replenishment quantity 𝑄 𝑅 = 100 + 105 + 110 + 100 + 95 + 110 + 90 + 100 + 90 + 110 + 105 + 95 = 1210 𝑏𝑎𝑔𝑠 Replenishment Cost (CR) = FW × No. of Orders = 200 × 9 = 1800 Rs. Carrying Cost (CC) = 𝜇 𝑤 𝐼 𝑤 +𝐿 𝑠𝑤 2 + 𝜎 𝑤 𝐼 𝑤 + 𝐿 𝑠𝑤 𝑉𝑤 ℎ 𝑤 Where 𝜎 𝑤 𝐼 𝑤 + 𝐿 𝑠𝑤 = (𝐼 𝑤 + 𝐿 𝑠𝑤 ) × 𝜎𝑟 2 = 0.67 + 0.03 × 10607.67 = 86.1705 𝐶 𝐶 = 10250 0.67 + 0.03 2 + 86.1705 110 × 1 = 404103.76 Transportation Cost (CT) = 𝑇𝑠 + 𝑡𝑠 𝜇 𝑤 𝐼 𝑤 𝑆 𝑑 𝑠𝑤 𝐷 𝑟 𝑄 𝑅 12 𝑟=1 = 1500 + 160 10250 ×0.67 560 25 8.4 = 424650 𝑅𝑠. Total Decentralized warehouse Cost = 1800 + 404103.76 + 424650 = 830553.76 Rs Total Decentralized Cost = Total Decentralized Retailer Cost + Total Decentralized warehouse Cost = 1265665.075 + 830553.76 = 2096218.835 Rs. (B) Centralized Ordering (Collective) Optimization: A number of different posits have made in the centralized injuctively authorizing model. In the decentralized injuctively authorizing, it is postulated that “each retailer finds its optimal order quantity, sends it to the warehouse, and receives it afterward. The main motivation of the centralized authoritatively mandating policy is to explore whether such a policy leads to a lower total system-wide cost by amending the inventory and conveyance decisions.” We propose “a collective form of authoritatively mandating by retailers and plan to minimize the inventory cost of the retailers and the warehouse jointly. The warehouse observes a sequence of ordinant dictations from a group of retailers situated in a given region. Ideally, these ordinant dictations should be shipped immediately. Retailers observe their customers’ demand and then collaborate to explore the optimal joint order amount and send it to the warehouse. Therefore, the warehouse and the retailers must optimize their decision variables in a way to reduce the total cost of the system. This denotes that we first find the total cost of the system (which is the summation of the warehouse and retailers costs) and then endeavor to determine the optimal value for the joint order size. Each retailer’s costs include conveyance cost, cost of replenishment and carrying cost.” (a) Retailer Model: The total cost to each retailer is defined as follows: TCr = CRr + CCr + CTr hereCRr , CCr and CTr can be determined as follows: 𝐶 𝑅𝑟 = 𝐹𝑟 𝑄 𝑅 𝐷𝑟 12 𝑟=1
  • 6. Impact and Dynamics of Centralization in Transportation Cost | IJMER | ISSN: 2249–6645 | www.ijmer.com| Vol. 5 | Iss.3| Mar. 2015 | 54| 𝐶 𝐶𝑟 = 𝑄 𝑟 2 + 𝜎𝑟 𝐿 𝑤𝑟 𝑉𝑟 ℎ 𝑟 [here, 𝜎𝑟 𝐿 𝑤𝑟 = 𝐿 𝑤𝑟 × 𝜎𝑟 2 ] 𝐶 𝑇𝑟 = 𝑇𝑤 + 𝑡 𝑤 𝑄 𝑅 𝑆 𝑑 𝑤𝑟 + 𝑁 (1 𝜌) 𝑄 𝑅 𝑆 × 𝐷𝑟 𝑄 𝑅 𝑁 𝑟=1 Data Collection: Table 7: Collective data of all Retailers Sr. No. Notation Value 1 Fixed Cost per Order (Fr) 220+220+....+220 = 2640 Rs 2 Variable Cost per Order (Vr) 150 Rs 3 Replenishment Order Quantity (QR) 100+105.......+95 = 1210 bags 4 Lead Time (Lwr) 2 Days i.e. 0.06 Month 5 Carrying charge (hr) 2.5 % 6 Retailers density ( ρ ) 5 7 Truck Capacity (S) 600 bags 8 Fixed Cost of transportation per order (Tw) 2500 Rs 9 Variable Cost of transportation per order (tw) 280 ton (a) Replenishment Cost 𝐶 𝑅 = 𝐹𝑟 𝑄 𝑅 𝐷𝑟 12 𝑟=1 = 2640 ×10250 1210 = 22363.64 𝑅𝑠. (b) Carrying Cost 𝐶 𝐶 = 𝑄 𝑟 2 + 𝜎𝑟 𝐿 𝑤𝑟 𝑉𝑟 ℎ 𝑟 Where 𝜎𝑟 𝐿 𝑤𝑟 = 𝐿 𝑤𝑟 × 𝜎𝑟 2 = 0.06 × 10607.67 = 25.2282 𝐶 𝐶 = 1210 2 + 25.2282 150 × 2.5 = 236335.58 Rs. (c) Transportation Cost 𝐶 𝑇 = 𝐶 𝑇𝑟 = 𝑇𝑤 + 𝑡 𝑤 𝑄 𝑅 𝑆 𝑑 𝑤𝑟 + 𝑁 (1 𝜌) 𝑄 𝑅 𝑆 × 𝐷 𝑟 𝑄 𝑅 𝑁 𝑟=1 𝐶 𝑇 = 𝐶 𝑇𝑟 = 2500 + 280 1210 600 79 + 12 (1 5) 1210 600 × 10250 1210 = 399083.6 𝑅𝑠. (d) Total Centralized Retailer Cost = 22363.64 + 236335.58 + 399083.6 = 657782.82 Rs (b) Warehouse model: The total cost to each warehouse is defined as follows: TCw = CRw + CCw + CTw hereCRw , CCw and CTw can be determined as follows: CRw = (Fw / QR) × ∑Nr=1 Dr CCw = (QR/2 + σwLsw) Vwhw [here, σwLsw = √(Lsw × σr2)] CTw = [Ts + ts(QR/S)dsw] × ( ∑Nr=1 Dr/ QR) The goal of centralized ordering model is “to jointly minimize the combined inventorycost of retailers and the warehouse.” Data Collection: Table 8: Collective data of Warehouse Sr. No. Notation Value 1 Fixed Cost per Order (Fw) 600 Rs 2 Variable Cost per Order (Vw) 500 Rs. 3 Distance from supplier to warehouse (dsw) 25 km 4 Lead Time (Lsw) 2 Days i.e. 0.06 Month 5 Truck Capacity (S) 700 Bags 6 Fixed Cost of transportation per order (α s) 3000 Rs 7 Variable Cost of transportation per order (ts) 350 Rs
  • 7. Impact and Dynamics of Centralization in Transportation Cost | IJMER | ISSN: 2249–6645 | www.ijmer.com| Vol. 5 | Iss.3| Mar. 2015 | 55| (a) Replenishment Cost 𝐶 𝑅 = 𝐹 𝑤 𝑄 𝑅 𝐷𝑟 12 𝑟=1 = 600 ×10250 1210 = 5082.65 𝑅𝑠. (b) Carrying Cost 𝐶 𝐶 = 𝑄 𝑅 2 + 𝜎 𝑤 𝐿 𝑠𝑤 𝑉𝑤 ℎ 𝑤 Where 𝜎 𝑤 𝐿 𝑠𝑤 = 𝐿 𝑠𝑤 × 𝜎𝑟 2 = 0.06 × 10607.67 = 25.2282 𝐶 𝐶 = 1210 2 + 25.2282 500 × 1 = 315114.1 Rs. (c) Transportation Cost 𝐶 𝑇 = 𝑇𝑠 + 𝑡𝑠 𝑄 𝑅 𝑆 𝑑 𝑠𝑤 × 𝐷 𝑟 12 𝑟=1 𝑄 𝑅 𝐶 𝑇 = 3000 + 350 1210 700 25 10250 1210 = 153538.22 𝑅𝑠. (d) Total Centralized Warehouse Cost = 5082.65+315114.1+153538.22 = 473734.97 Rs Total Centralized Cost = Total centralized Retailer Cost + Total Centralized Warehouse Cost = 657782.82 + 473734.97 = 1131517.79 Rs. Difference between Total Decentralized Cost and Total Centralized Cost = 2096218.835 – 1131517.79 = 964701.045 Rs IV. Conclusion We have formulated “a multi-level inventory model that includes transportation costs for planning the replenishment of a single commodity. The conclusion of the research is minimization the total inventory cost while considering a discrete transportation cost. Finally, development of a collective form of ordering by retailers and plan to minimize the inventory cost of the retailers and the warehouse jointly.” Two models are developed considering “the scenarios of centralized ordering and decentralized ordering. A numerical example was solved for both models. Results indicate that having collaboration among the retailers and the warehouse or applying a collective ordering strategy results in reduced costs when compared to the decentralized ordering strategy. Furthermore, it was shown that the transportation cost contains a considerable percentage of the total cost, while this cost has been usually overlooked.” The difference between the total cost of decentralized and centralized model is 964701.05 Rs. So, the total cost is minimized by minimizing the transportation cost. REFERENCES [1] Srinivasa Rao Y, Kesava Rao V.V.S.(2012), “Optimal Ordering policies of a Two Echelon Supply Chain for Deteriorating Items”, International Journal of Computer Applications. [2] L. M. Bouter (2009), “Service Inventory Management Solution Technique for inventory system without backorders”. [3] Alexandre Vieira Braga, Marcos Antônio Souza (2012), “Costs, Prices and Results’ Management: A Study Conducted in Fruit Canning Companies Located in Rio Grande do Sul State, Brazil”, International Business Research. [4] AnirbanSaha&Arindam Roy (2012), “Multi-item two storage inventory models for breakable items with fuzzy cost and resources based on different defuzzification techniques”, Operational Research Society of India. [5] Ching-Fang Lee, Chien-Ping Chung (2012), “An Inventory Model for Deteriorating Items in a Supply Chain with System Dynamics Analysis”, Science direct. [6] Wenbin Wang, Michael G. Pecht (2012), “Cost Optimization for Canary-Equipped Electronic Systems in Terms of Inventory Control and Maintenance Decisions”, IEEE Transactions on Reliability, vol. 61 [7] Armand Baboli, Julien Fondrevelle, Ali Mehrabi (2011), “Canning Companies Located in Rio Grande do Sul State, Brazil”, International Journal of Advanced Manufacturing Technology. [8] Reza Shahrjerdi, MohdKhairolAnuar (2011), “An integrated inventory models under cooperative and non-cooperative seller-buyer and vendor supply chain”, African Journal of Business Management. [9] NichalinSuakkaphong, Moshe Dror (2011), “Managing decentralized inventory and transshipment”, Sociedad de Estadística e InvestigaciónOperativa [10] Mir-BahadorAryanezhad, SeyedGholamrezaJalaliNaini (2011), “An integrated model for designing supply chain network under demand and supply uncertainty”, African Journal of Business Management. [11] Armand Baboli& Julien Fondrevelle (2011), “A replenishment policy based on joint optimization in a downstream pharmaceutical supply chain: centralized vs. decentralized replenishment”, Springer-Verlag London Limited.