(r, Q) Inventory Control in Multi-Modal Distribution Systems with Flexible Channel Allocation

In order to improve supply system robustness, or gain cost advantage, multiple delivery modes may be used. In this work, the (r, Q) inventory policy is formally investigated as a tool to control the resupply process of a remote depot that answers uncertain market demand. In the considered scenario, the goods are relocated using multiple channels with diverse properties concerning transportation delay, lot size, and quality, e.g., trucks, or trains. The lot partitioning strategy is adapted on the fly to the current channel characteristics. A dynamic model of the supplier-depot interaction is built and used to evaluate the policy properties in a robust control framework. Using the constructed framework, it is explicitly shown how to select the policy parameters to obtain full demand realization, thus eliminating backorders, irrespective of the pattern of delay and demand fluctuations. It is also discussed how to assign the warehouse space at the depot so that emergency storage will not be required even though, as a result of channel disruptions, deliveries from a few periods arrive simultaneously, or out of order.