A Traditional Centralized Inventory System Essay

1379 Words Nov 4th, 2015 6 Pages
Fig. 1a describes a traditional centralized inventory system. Two companies produce two different products, and each company owns a plant and a warehouse. Each warehouse supplies distribution centres belonging to the retailers and each Distribution Centre supplies in a region where customer demand is satisfied. For each order of a product the sourcing point is already predetermined. The inventory control decisions are taken when ordering new items and their quantity, while considering factors, such as costs.
Fig. 1b is an inventory model under the PI. The networks are linked via interfaces and the goods are transported and stored through smart containers called PI-containers with sensors that contain all the relevant data like routing information. Goods can be stored and distributed in PI-hub in Physical Internet that can be accessed by all users. The hubs may be owned by Logistic Service Providers, to whom users will pay for the service that they have used at a time. That means each company can place their stocks at any hubs all around the network, while the hubs can source directly from warehouses.
In addition, a supplier is able to push products toward the market regardless of retailers. the retailers can be supplied by several sources (hubs) and at any stocking points pooling lead time risks and leading to a reduced stock level. In comparison to traditional inventory systems, the sourcing points for retailers are not fixed the flows of goods are no longer predetermined.…

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