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Characterizing order processes of using (R,nQ) inventory policies in supply chains

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  • Li, Xiaoming
  • Sridharan, V.

Abstract

This study characterizes order processes under (R,nQ) inventory policies. We show first that the order distribution at an installation is stationary when it uses an (R,nQ) control policy, for any arbitrary stationary distribution of customer demand. We then quantify variance amplification and show that variance of orders is never less than the demand variance. Finally, we extend the analysis to the case where the supply chain comprises of one distributor and N retailers serving customers.

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  • Li, Xiaoming & Sridharan, V., 2008. "Characterizing order processes of using (R,nQ) inventory policies in supply chains," Omega, Elsevier, vol. 36(6), pages 1096-1104, December.
    • Handle: RePEc:eee:jomega:v:36:y:2008:i:6:p:1096-1104
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    2. Li, Xiaoming, 2008. "Demand evolution in stochastic inventory systems: Riskiness increase," International Journal of Production Economics, Elsevier, vol. 116(2), pages 182-189, December.
    3. Agrawal, Narendra & Smith, Stephen A., 2019. "Optimal inventory management using retail prepacks," European Journal of Operational Research, Elsevier, vol. 274(2), pages 531-544.
    4. Mao Zheng & Ningning Cui & Yibin Zhang & Fangfang Zhang & Victor Shi, 2023. "Inventory Policies and Supply Chain Coordination under Logistics Route Disruption Risks," Sustainability, MDPI, vol. 15(13), pages 1-20, June.
    5. Li, Xiaoming, 2020. "Valuing lead-time and its variance in batch-ordering inventory policies," International Journal of Production Economics, Elsevier, vol. 228(C).
    6. Wang, Xun & Disney, Stephen M., 2016. "The bullwhip effect: Progress, trends and directions," European Journal of Operational Research, Elsevier, vol. 250(3), pages 691-701.
    7. Ramasesh, Ranga V., 2010. "Lot-sizing decisions under limited-time price incentives: A review," Omega, Elsevier, vol. 38(3-4), pages 118-135, June.
    8. Noblesse, Ann M. & Boute, Robert N. & Lambrecht, Marc R. & Van Houdt, Benny, 2014. "Characterizing order processes of continuous review (s,S) and (r,nQ) policies," European Journal of Operational Research, Elsevier, vol. 236(2), pages 534-547.

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