THE OPERATION OF VENDING MACHINE SYSTEMS WITH STOCK-OUT-BASED, ONE-STAGE ITEM SUBSTITUTION
Keywords:Service Systems Engineering, System Performance Analysis
The operation of vending machine systems presents a decision-making problem consisting of item allocation to storage compartments, inventory replenishment, and vehicle routing, all of which have critical effects on system profit. In this paper, we propose a two-phase solution with an iterative improvement procedure for the operation problem with stock-out-based, one-stage item substitution in vending machine systems. In the first phase, the item allocation to storage compartments and the replenishment intervals of vending machines are determined by solving a non-linear integer mathematical model for each machine. In the second phase, vehicle routes for replenishing vending machine inventories are determined by applying the savings-based algorithm, which minimizes the sum of transportation and shortage costs. The accuracy of the solution is improved by iteratively executing the two phases. The optimality of the proposed solution is evaluated on small test problems. We present an application of the proposed solution to an industry problem and carry out computational experiments on test problems to evaluate the effectiveness of the stock-out allowance policy with one-stage item substitution compared to the no-stock-out allowance policy with respect to system profit. The results show the substantial economic advantage of the stock-out allowance policy. Sensitivity analysis indicates that some input variables significantly impact the effectiveness of this policy.
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