An EOQ model with consideration of second-trip in-store replenishment

Abstract

Ideally, the aim of a retail store is single-trip in-store replenishment. In other words, a store worker should only need to make a single trip to fill the shelves after a product has been delivered to the store. This can be achieved if the size of the lot received is smaller than the shelf space minus the number of units left on the shelves at the time of shelf replenishment. In this paper, we introduce the consideration of the in-store handling cost for the second trip in an EOQ-type model to determine the optimal order quantity, given the available retail shelf space. Our model considers the case where products are ordered in multiple packs and one part of the distribution-handling cost is the cost per each pack handled. The insights gained from the model will help manufacturing managers, vendors and retail managers make better decisions with regard to the lot size produced, ordered, and delivered as part of an effective supply chain management strategy.