Inventory pooling to deliver differentiated service

Aydin Alptekinoglu, Arunava Banerjee, Anand Paul, Nikhil Jain

Research output: Contribution to journalArticle

16 Citations (Scopus)

Abstract

Inventory pooling is at the root of many celebrated ideas in operations management. Postponement, component commonality, and resource flexibility are some examples. Motivated by our experience in the aftermarket services industry, we propose a model of inventory pooling to meet differentiated service levels for multiple customers. Our central research question is the following: What are the minimum inventory level and optimal allocation policy when a pool of inventory is used in a single period to satisfy individual service levels for multiple customers We measure service by the probability of fulfilling a customer's entire demand immediately from stock. We characterize the optimal solution in several allocation policy classes; provide some structural results, formulas, and bounds; and also make detailed interpolicy comparisons. We show that the pooling benefit is always strictly positive, even when there are an arbitrary number of customers with perfectly positively correlated demands.

Original languageEnglish (US)
Pages (from-to)33-44
Number of pages12
JournalManufacturing and Service Operations Management
Volume15
Issue number1
DOIs
StatePublished - Dec 1 2013

Fingerprint

Inventory pooling
Service levels
Operations management
Component commonality
Postponement
Optimal solution
Optimal allocation
Pooling
Service industries
Aftermarket
Resources

All Science Journal Classification (ASJC) codes

  • Strategy and Management
  • Management Science and Operations Research

Cite this

Alptekinoglu, Aydin ; Banerjee, Arunava ; Paul, Anand ; Jain, Nikhil. / Inventory pooling to deliver differentiated service. In: Manufacturing and Service Operations Management. 2013 ; Vol. 15, No. 1. pp. 33-44.
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Inventory pooling to deliver differentiated service. / Alptekinoglu, Aydin; Banerjee, Arunava; Paul, Anand; Jain, Nikhil.

In: Manufacturing and Service Operations Management, Vol. 15, No. 1, 01.12.2013, p. 33-44.

Research output: Contribution to journalArticle

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