MODELLING OF BASE STOCK LEVEL AND PRODUCT ALLOCATION OPTIMIZATION ON MULTI DEPOT MULTI SALES LOCATION DISTRIBUTION SYSTEM

The inventory system was a very complex problem if being affected by stochastic demand and leadtime. There were several available models for the case of multi depot multi sales location, all of them did not consider the variation of leadtime where leadtime was regarded as deterministic. In the real condition, leadtime is almost always changing depended on condition in the field. Leadtime that always changed was very influential towards the value of safety stock because the higher the variation of leadtime, the bigger the safety stock needed. Based on this condition, then this research tried to adopt several available models but by considering the variation of leadtime.

The inventory system that will be discussed in this research was the inventory system of single depot multi sales loc
ation that afterwards will be continued to multi depot multi sales location. To complete this problem, it was made a
 model that was divided into two stages. The first was the model for the single depot multi sales location distribu
tion system through the heuristic approach using the stochastic dynamic programming method and the second was the
model of multi depot multi sales location. The aim of this model was to look for the optimal base stock level and
allocation that minimize the total distribution cost. The distribution cost consisted of the inventory holding cost,
backordering cost, transportation cost, and pipeline handling inventory cost.


Analysis of this model was done in two stages, that are the validation stage and the comparative stage.
The validation stage consisted of the sensitivity analysis and the numeric example for the case of 2 depots
 4 sales locations. The comparative stage was done by comparing the beginning model that used
deterministic leadtime to the developed model that used stochastic leadtime. Using the results of the
analysis could be concluded that the size of base stock level and the allocation of the developed model are
bigger than the beginning model.  

Keyword :periodic review inventory, multi depot multi sales location distribution system stochastic dynamic programming method.