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Inventory Policy in the Presence of Market Disruptions

Author

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  • Hung-Po Chao

    (Electric Power Research Institute, Palo Alto, California)

Abstract

This paper presents a dynamic model concerning optimal inventory policies in the presence of market disruptions, which are often characterized by events with uncertain arrival time, severity and duration. The model is based on the framework of a continuous-time Markov decision process with a finite state space. We develop a general characterization of the optimal inventory policy, interpret it in economic terms, and then apply it to two special cases, yielding explicit analytic results.

Suggested Citation

  • Hung-Po Chao, 1987. "Inventory Policy in the Presence of Market Disruptions," Operations Research, INFORMS, vol. 35(2), pages 274-281, April.
    • Handle: RePEc:inm:oropre:v:35:y:1987:i:2:p:274-281
    DOI: 10.1287/opre.35.2.274
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    Citations

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    Cited by:

    1. Mahmut Parlar & David Perry, 1996. "Inventory models of future supply uncertainty with single and multiple suppliers," Naval Research Logistics (NRL), John Wiley & Sons, vol. 43(2), pages 191-210, March.
    2. Ji, Xiang & Sun, Jiasen & Wang, Zebin, 2017. "Turn bad into good: Using transshipment-before-buyback for disruptions of stochastic demand," International Journal of Production Economics, Elsevier, vol. 185(C), pages 150-161.
    3. Parlar, Mahmut & Perry, David, 1995. "Analysis of a (Q, r, T) inventory policy with deterministic and random yields when future supply is uncertain," European Journal of Operational Research, Elsevier, vol. 84(2), pages 431-443, July.
    4. Snyder, Lawrence V., 2014. "A tight approximation for an EOQ model with supply disruptions," International Journal of Production Economics, Elsevier, vol. 155(C), pages 91-108.
    5. Çağrı Latifoğlu & Pietro Belotti & Lawrence V. Snyder, 2013. "Models for production planning under power interruptions," Naval Research Logistics (NRL), John Wiley & Sons, vol. 60(5), pages 413-431, August.
    6. Antonio Arreola‐Risa & Gregory A. DeCroix, 1998. "Inventory management under random supply disruptions and partial backorders," Naval Research Logistics (NRL), John Wiley & Sons, vol. 45(7), pages 687-703, October.
    7. Parlar, Mahmut & Wang, Yunzeng & Gerchak, Yigal, 1995. "A periodic review inventory model with Markovian supply availability," International Journal of Production Economics, Elsevier, vol. 42(2), pages 131-136, December.
    8. Mahmut Parlar & Defne Berkin, 1991. "Future supply uncertainty in EOQ models," Naval Research Logistics (NRL), John Wiley & Sons, vol. 38(1), pages 107-121, February.

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