Demand differentiation in inventory systems

This book deals with inventory systems where customer demand is categorised into different classes. Most inventory systems do not take into account individual customer preferences for a given product, and therefore handle all demand in a similar way. Nowadays, market segmentation has become a popular practice followed by marketing managers who desire to offer different service to different customers. In this book the impact of such practices on the inventory cost is analysed. Part I discusses a so-called break quantity rule which distinguishes customer demand based on order sizes. Small orders are delivered from stock on hand, whereas large orders are delivered in an alternative way, e.g. through direct deliveries from the factory. In Part II the critical level policy is analysed. This policy reserves some stock for high priority customers and enables to set different service levels for several demand classes. Part III of this book deals with a generalisation of the joint replenishment problem. An efficient algorithm for a multi-product inventory system with general inventory costs and service level restrictions is presente