Benefits of Dynamic Routing in a Distribution System with Single Warehouse and Multiple Retailers

The author investigates a distribution system consisting of one warehouse and multiple retailers. First, they study the characteristics of a dynamic allocation policy associated with dynamic routing policy. The authors, then, conduct simulation study to investigate the performance of different forms of dynamic routing policies under both symmetric and asymmetric scenarios. The author’s numerical findings show that both SLIF (Static Least Inventory First) routing and DLIF (Dynamic Least Inventory First) routing outperform static routing significantly. In addition, DLIF routing provides more savings compared to SLIF routing. When the asymmetry among retailers is not significant, both SLIF routing and DLIF routing can be used as good heuristic dynamic routing policies given that they are easy to execute.