Abstract

Various retail items are transported from manufacturers to stores in prepacks, containing multiples of the same Stock Keeping Unit (SKU) or combinations of related SKUs. While prepacks cut down on supply chain costs, they can lead to supply-demand imbalances. This study introduces a novel method to determine optimal replenishment strategies for different prepack combinations. Using optimization, the model offers solutions via linear programming for steady-state scenarios. It addresses two-SKU prepack cases, revealing insights into prepack design's cost-effectiveness. We focus on two policies; namely simultaneous policy and sequential policy. For the former, we allow the two prepacks to be ordered simultaneously or sequentially. In the simultaneous policy, we determine the best order quantities. Conversely, in the sequential policy, we first identify which prepack should be ordered initially—recognizing that the sequence impacts the overall cost. Subsequently, we ascertain the optimal order quantities. Notably, our analysis reveals that in the optimal scenario, at least one prepack should be ordered only once.