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Periodic Versus "Can-Order" Policies for Coordinated Multi-Item Inventory Systems

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Author Info

  • Derek R. Atkins

    (Faculty of Commerce and Business Administration, The University of British Columbia, Vancouver, British Columbia, Canada V6T 1Y8)

  • Paul O. Iyogun

    (School of Business and Economics, Wilfred Laurier University, Waterloo, Ontario, Canada N2L 3C5)

Registered author(s):

    Abstract

    The coordinated multi-item inventory problem refers to the problem of managing inventories where there is a joint fixed cost for replenishing plus an item-by-item fixed cost for each item included in the replenishment order. Given that the optimal solution is likely to be too complex, attention has focused on fixed heuristics, and in particular `can-order' or (s, c, S) policies. This paper makes two contributions. First, a new lower bound on the cost of the optimal policy is proposed in order that the performance of heuristics may be measured. Second, motivated by the lower bound, a simple periodic policy is proposed and shown to be an improvement over `can-order' policies for many data sets.

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    File URL: http://dx.doi.org/10.1287/mnsc.34.6.791
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    Bibliographic Info

    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 34 (1988)
    Issue (Month): 6 (June)
    Pages: 791-796

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    Handle: RePEc:inm:ormnsc:v:34:y:1988:i:6:p:791-796

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    Related research

    Keywords: inventory/production; ordering policies; stochastic models;

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    Cited by:
    1. Olsen, Anne L., 2008. "Inventory replenishment with interdependent ordering costs: An evolutionary algorithm solution," International Journal of Production Economics, Elsevier, vol. 113(1), pages 359-369, May.
    2. Eric Porras Musalem & Rommert Dekker, 2003. "Controlling Inventories in a Supply Chain," Tinbergen Institute Discussion Papers 03-012/4, Tinbergen Institute.
    3. Tsai, Chieh-Yuan & Tsai, Chi-Yang & Huang, Po-Wen, 2009. "An association clustering algorithm for can-order policies in the joint replenishment problem," International Journal of Production Economics, Elsevier, vol. 117(1), pages 30-41, January.
    4. Porras Musalem, E. & Dekker, R., 2002. "Controlling inventories in a supply chain: a case study," Econometric Institute Research Papers EI 2002-53, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    5. Kiesmüller, G.P., 2009. "A multi-item periodic replenishment policy with full truckloads," International Journal of Production Economics, Elsevier, vol. 118(1), pages 275-281, March.
    6. Zhang, Ren-qian & Kaku, Ikou & Xiao, Yi-yong, 2011. "Deterministic EOQ with partial backordering and correlated demand caused by cross-selling," European Journal of Operational Research, Elsevier, vol. 210(3), pages 537-551, May.
    7. Melchiors, Philip, 2002. "Calculating can-order policies for the joint replenishment problem by the compensation approach," European Journal of Operational Research, Elsevier, vol. 141(3), pages 587-595, September.
    8. Schultz, Helle & Johansen, Soren Glud, 1999. "Can-order policies for coordinated inventory replenishment with Erlang distributed times between ordering," European Journal of Operational Research, Elsevier, vol. 113(1), pages 30-41, February.
    9. Ashayeri, J. & Heuts, R.J.M. & Lansdaal, H.G.L. & Strijbosch, L.W.G., 2006. "Cyclic production-inventory planning and control in the pre-Deco industry: A case study," International Journal of Production Economics, Elsevier, vol. 103(2), pages 715-725, October.

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