Orders flow upstream, while deliveries flow downstream in the supply chain.
Retailer’s Order(RO) will depend on the DIL(Desired Inventory Level), RS(Retailer's Sale) and RBl(Retailer's Backlog)
The Lead Time is 1 week that is whatever quantity is ordered now will be delivered after 3 weeks depending on the availability of the stock. If the wholesaler doesnot have the quantity it will be added in wholesaler's backlog(WOBL) and would be sent as and when stock arrives.
Lead Time can be result of multiple reasons (Transportation time, Manufacturing time etc.).
1. RInv : Retailer's Inventory
2. RS : Retailer's Sales
3. RBl : Retailer's Backlog
4. DIL : Desired Inventory Level
5. RO : Retailer's Order
6. WOBl : Wholesaler's Backlog
7. WS : Wholesaler's Shipment
8. ROR : Retailer's Order Received
RInv(i) = RInv(i - 1) + ROR
ROR =WS
If(RInv(i) > RS+RBl)
RInv(i) = RInv -RS-RBl
RBl=0
Else
RBl = RBl + RS - RInv(i)
RInv(i) =0
Note:Similar set of variables as well as equation will be there for other players