author Yongwon Seo 
2nd author / Sungwon Jung (Dept. of Industrial Engineering, Seoul National University)
/ Juho Hahm (Dept. of Industrial Engineering, Seoul National University) 
info This paper was accepted on 2000/1.

Computers & Operations Research (SCIE, 1.366), Vol. 29, pp.171-193, 2002 
year 2002 
c IJ 
저널/학회 C&OR 
group SCIE 
keyword Multi-echelon inventory systems; Supply chain management; Reorder policy; Order risk policy 
abstract The objective of this paper is to develop an optimal reorder policy for a two-echelon distribution system with one central warehouse and multiple retailers. We assume the warehouse has centralized stock information and each facility uses continuous-review batch ordering policy. Since echelon stock policies may show
poor performance for distribution systems, we propose a new type of policy that utilizes the centralized stock information more e!ectively. We de"ne the order risk policy, which decides reorder time based on the order risk which represents the relative cost increase due to immediate order compared to delayed order. We
formulate the order risk and prove the optimality of the order risk policy under the system assumption that the warehouse guarantees delivery within the "xed lead time. The order risk is derived from the marginal analysis. Since exact calculation of the order risk is complex, an approximation method is provided. Computational experiment that compares our policy with existing policies shows that a signi"cant cost savings is obtained. The concept of the order risk can be extended to the other models. 
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