distribution/replenishment solutiondistribution/replenishment solution - A pull-distribution method that involves setting stock buffer sizes and then monitoring and replenishing inventory within a supply chain based on the actual consumption of the end user rather than a forecast. Each link in the supply chain holds the maximum expected demand within the average replenishment time, adjusted for the level of unreliability in replenishment time. Each link generally receives what was shipped or sold, though this amount is adjusted up or down when buffer management detects changes in the demand pattern.
Usage: In the TOC distribution/replenishment solution the largest amounts of inventory are held at a central warehouse, where the variation in demand is the least. Smaller amounts of inventory are held and replenished frequently at the end consumer location where variation in demand is the greatest. Throughput-dollar-days and inventory-dollar-days are used to measure the reliability and effectiveness, respectively, of each link in the chain. Transfer pricing is not used.