A Revision of the Power Approximation for Computing (s, S) Policies
AbstractA 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.
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Bibliographic InfoArticle provided by INFORMS in its journal Management Science.
Volume (Year): 30 (1984)
Issue (Month): 5 (May)
inventory/production: approximations; inventory/production: periodic review models;
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- Baker, H. & Ehrhardt, R., 1995. "A dynamic inventory model with random replenishment quantities," Omega, Elsevier, vol. 23(1), pages 109-116, February.
- 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.
- 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.
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