Analysis and Comparison of 2 Strategies for Multi-Item Inventory Systems with Joint Replenishment Costs

Multi-item inventory systems with joint replenishment costs are studied for constant deterministic demand. Two different types of strategies are distinguished - direct grouping strategies and indirect grouping strategies. Under an indirect grouping strategy, a family replenishment is made at constant intervals. Under a direct grouping strategy, a family replenishment is not equally spaced. Different heuristics are reviewed for these types of strategies. The performances of the strategies are measured as the percentage cost savings of a joint replenishment strategy relative to an independent strategy. These performances are quantified through simulation. It is concluded that only 2 factors are important, namely: 1. the ratio of the major setup cost to the mean minor setup cost, and 2. the number of items in the family. Regression analysis is used to model the input-output behavior of the simulation experiments with these 2 factors.