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A Revision of the Power Approximation for Computing (s, S) Policies

Author

Listed:
  • Richard Ehrhardt

    (School of Business and Economics, University of North Carolina, Greensboro, North Carolina 27412)

  • Charles Mosier

    (School of Management, Clarkson College, Potsdam, New York 13676)

Abstract

A revision of the Power Approximation for computing (s, S) inventory policies is presented. The revision incorporates modifications which (1) ensure homgeneity in the units chosen to measure demand and (2) ensure the proper limiting behavior of S - s when the variance of demand is extremely small. Computational experience shows that the revision has operating characteristics that are typically within a few percent of optimal, which is nearly as accurate as the original Power Approximation.

Suggested Citation

  • Richard Ehrhardt & Charles Mosier, 1984. "A Revision of the Power Approximation for Computing (s, S) Policies," Management Science, INFORMS, vol. 30(5), pages 618-622, May.
    • Handle: RePEc:inm:ormnsc:v:30:y:1984:i:5:p:618-622
    DOI: 10.1287/mnsc.30.5.618
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    Citations

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    Cited by:

    1. Strijbosch, L.W.G. & Moors, J.J.A., 1999. "Simple Expressions for Safety Factors in Inventory Control," Other publications TiSEM 2f1bb350-ce71-4adf-beca-b, Tilburg University, School of Economics and Management.
    2. Bijvank, Marco & Bhulai, Sandjai & Tim Huh, Woonghee, 2015. "Parametric replenishment policies for inventory systems with lost sales and fixed order cost," European Journal of Operational Research, Elsevier, vol. 241(2), pages 381-390.
    3. van Donselaar, Karel H. & Broekmeulen, Rob A.C.M., 2012. "Approximations for the relative outdating of perishable products by combining stochastic modeling, simulation and regression modeling," International Journal of Production Economics, Elsevier, vol. 140(2), pages 660-669.
    4. Zied Babai, M. & Syntetos, Aris A. & Teunter, Ruud, 2010. "On the empirical performance of (T, s, S) heuristics," European Journal of Operational Research, Elsevier, vol. 202(2), pages 466-472, April.
    5. E A Silver & H Naseraldin & D P Bischak, 2009. "Determining the reorder point and order-up-to-level in a periodic review system so as to achieve a desired fill rate and a desired average time between replenishments," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 60(9), pages 1244-1253, September.
    6. B S Maddah & M Y Jaber & N E Abboud, 2004. "Periodic review (s, S) inventory model with permissible delay in payments," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 55(2), pages 147-159, February.
    7. Jeon G. Kim & Daewon Sun & Xin James He & Jack C. Hayya, 2004. "The (s, Q) inventory model with Erlang lead time and deterministic demand," Naval Research Logistics (NRL), John Wiley & Sons, vol. 51(6), pages 906-923, September.
    8. van Donselaar, Karel H. & Broekmeulen, Rob A.C.M., 2013. "Determination of safety stocks in a lost sales inventory system with periodic review, positive lead-time, lot-sizing and a target fill rate," International Journal of Production Economics, Elsevier, vol. 143(2), pages 440-448.
    9. Hasni, M. & Aguir, M.S. & Babai, M.Z. & Jemai, Z., 2019. "On the performance of adjusted bootstrapping methods for intermittent demand forecasting," International Journal of Production Economics, Elsevier, vol. 216(C), pages 145-153.
    10. Baker, H. & Ehrhardt, R., 1995. "A dynamic inventory model with random replenishment quantities," Omega, Elsevier, vol. 23(1), pages 109-116, February.
    11. Everette S. Gardner, 2004. "Dimensional Analysis of Airline Quality," Interfaces, INFORMS, vol. 34(4), pages 272-279, August.
    12. Kaan Katircioglu & Robert Gooby & Mary Helander & Youssef Drissi & Pawan Chowdhary & Matt Johnson & Takashi Yonezawa, 2014. "Supply Chain Scenario Modeler: A Holistic Executive Decision Support Solution," Interfaces, INFORMS, vol. 44(1), pages 85-104, February.

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