This section presents HDDI as an ADDM algorithm for highly efficient inventory management. HDDI comprises four key components. The first is the concept of emergency replenishment, wherein a retail unit is permitted to request the transfer of items from another retail unit in the neighborhood when, despite an outstanding reorder request from the warehouse, the demand continues to rapidly deplete the inventory level and the latter falls below an emergency threshold value. The aim is to satisfy local demand fast because, in general, the time to transfer from a retail unit is shorter than that from the warehouse. Second, for HDDI to be effective in today's environment of rapid price changes stemming from competition and fast-paced consumer demand, the cost function must be dynamic, i.e., reevaluated with current system parameters whenever the inventory level falls below the threshold. Consequently, HDDI is expected to track the dynamic consumer demand closely, resulting in a lower cost function than the traditional schemes. Third, frequent cost function evaluation is likely to require significant computation. Therefore, HDDI proposes the distribution of the overall inventory management computation among all of the retail units. Each retail unit determines the reorder point, which includes the (1) source of items, warehouse or a specific retail unit; (2) order quantity; and (3) lead time, where (2) and (3) are determined by the nature of the source. Fourth, HDDI organizes inventory management networks into a region-based multilevel hierarchy where one or more retail units and...
TABLE OF CONTENTS 
