Basics of Supply Chain Management

Chapter 11

Distribution Inventory Management

11.1 Introduction

Distribution inventory management provides the required level of customer service, minimizes the total costs of transportation and handling, and interacts with the factory to minimize scheduling problems. Distribution systems vary considerably, but in general, they have a central supply facility that is supported by a factory, a number of distribution centers or warehouses, and finally, the customers. The customers may be the final consumer or some intermediary in the distribution chain.

Unless a firm delivers directly from the factory to the customer, demand on the factory is created by a central supply facility. In turn, demand on central supply is created by the distribution centers. ...