An inventory model for slow moving items subject to obsolescence
AbstractIn this paper, we consider a continuous review inventory system of a slow moving item for which the demand rate drops to a lower level at a known future time instance. The inventory system is controlled according to a one-for-one replenishment policy with a fixed lead time. Adapting to lower demand is achieved by changing the control policy in advance and letting the demand take away the excess stocks. We show that the timing of the control policy change primarily determines the tradeoff between backordering penalties and obsolescence costs. We propose an approximate solution for the optimal time to shift to the new control policy minimizing the expected total cost during the transient period. We find that the advance policy change results in significant cost savings and the approximation yields near optimal expected total costs.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal European Journal of Operational Research.
Volume (Year): 213 (2011)
Issue (Month): 1 (August)
Contact details of provider:
Web page: http://www.elsevier.com/locate/eor
Inventory control Spare parts Obsolescence Advance policy change Excess stock Installed base;
Other versions of this item:
- Pinçe, C. & Dekker, R., 2009. "An Inventory Model for Slow Moving Items Subject to Obsolescence," ERIM Report Series Research in Management ERS-2009-053-LIS, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni.
- L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
- M - Business Administration and Business Economics; Marketing; Accounting
- M11 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Production Management
- R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- G. Hadley & T. M. Whitin, 1962. "A Family of Dynamic Inventory Models," Management Science, INFORMS, vol. 8(4), pages 458-469, July.
- Teunter, Ruud H. & Fortuin, Leonard, 1999. "End-of-life service," International Journal of Production Economics, Elsevier, vol. 59(1-3), pages 487-497, March.
- George W. Brown & John Y. Lu & Robert J. Wolfson, 1964. "Dynamic Modeling of Inventories Subject to Obsolescence," Management Science, INFORMS, vol. 11(1), pages 51-63, September.
- Anthony Hart, 1973. "Determination of Excess Stock Quantities," Management Science, INFORMS, vol. 19(12), pages 1444-1451, August.
- Teunter, Ruud H. & Klein Haneveld, Willem K., 2002. "Inventory control of service parts in the final phase: A central depot and repair kits," European Journal of Operational Research, Elsevier, vol. 138(1), pages 76-86, April.
- Teunter, Ruud H. & Klein Haneveld, Willem K., 2002. "Inventory control of service parts in the final phase," European Journal of Operational Research, Elsevier, vol. 137(3), pages 497-511, March.
- Dekker, R. & Pinçe, C. & Zuidwijk, R.A. & Jalil, M.N., 2010.
"On the use of installed base information for spare parts logistics: a revieuw of ideas and industry practice,"
Econometric Institute Research Papers
EI 2010-73, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
- Dekker, Rommert & Pinçe, Çerağ & Zuidwijk, Rob & Jalil, Muhammad Naiman, 2013. "On the use of installed base information for spare parts logistics: A review of ideas and industry practice," International Journal of Production Economics, Elsevier, vol. 143(2), pages 536-545.
- Teunter, Ruud H. & Syntetos, Aris A. & Zied Babai, M., 2011. "Intermittent demand: Linking forecasting to inventory obsolescence," European Journal of Operational Research, Elsevier, vol. 214(3), pages 606-615, November.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.