The Dynamic Replenishment Batch Model Based on Virtual Warehousing

This paper addresses the multi-period dynamic replenishment batch problem under stochastic demand, real-time items prices fluctuation in the equipment manufacturing industry. The dynamic replenishment batch model based on virtual warehousing is presented to minimize the expected total cost. It is assumed that the total cost is comprised of fixed ordering costs, items costs, transportation costs, inventory holding costs and shortage costs. And the heuristic algorithm based on fast seeking method and golden section method is developed. The effectiveness of the algorithm is demonstrated by numerical results.