AN INVENTORY MODEL FOR A HIGH-VALUE LOW-DEMAND CONSUMER GOODS SUPPLY CHAIN

The objective of this paper is to develop a reorder policy for a two-echelon supply chain with one central stock and multiple stores. The products under concern are high value imported watches, which exhibit high intermittent demand on the points of sale. The manager has centralized stock information over the entire chain and each store employs a base stock ordering policy. In spite of the lumpy demand on the stores, the monthly aggregate demand on the supply chain is significant and so, can be modeled using the continuous normal distribution approximation. The proposed model consists of an exponential smoothing forecasting model for the aggregate demand, a simple disaggregating method to derive the single items forecasts and a periodic reorder procedure. The order quantities of each item are determined according to the Poisson distribution and a desired service level. The purchased items are kept in the central stock and are shipped to stores on demand. The results achieved so far are very encouraging and should be extended to a wider range of brands and products