Maintaining the Service Level by Using the Coordinated Order Model for the Replenishment of Distribution Stocks

The distribution companies coordinate the multi-item replenishment orders in the view of truck transport to benefit from major cost savings. Yet, the moment of order launching and item allocation can generate stock surplus or shortage, preventing these companies from reaching the established service level. The current study presents a mathematical model introduced by Carlson and Miltenburg and applied at first to the wooden products transport. The authors extend the field of application to the case of a tire distribution company that orders multiple similar items, the amount of the total order representing a full truckload, from a single distribution point. The results of the model allows establishing the moment of order launching and the volume of the order for each item on the basis of balancing the real service level with the service objective, offering thus to the company a favourable competitive position.