Allocating A Replenishment Order Among A Family of Items

Inventory control models which provide coordinated control (or joint replenishment) of families of items are very useful in practice. An important component of these models is the algorithm for allocating a total reorder quantity among the items in the family. In this paper the allocation algorithm from a new class of coordinated control models is discussed. Inventory position is modelled as a diffusion process, and both continuous review and periodic review situations are considered. This new class of coordinated control models has been shown to outperform existing models (IBM's IMPACT Inventory Control Package).