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Computing the non-stationary replenishment cycle inventory policy under stochastic supplier lead-times

Listed author(s):
  • Rossi, Roberto
  • Tarim, S. Armagan
  • Hnich, Brahim
  • Prestwich, Steven
Registered author(s):

    In this paper we address the general multi-period production/inventory problem with non-stationary stochastic demand and supplier lead-time under service level constraints. A replenishment cycle policy (Rn,Sn) is modeled, where Rn is the nth replenishment cycle length and Sn is the respective order-up-to-level. We propose a stochastic constraint programming approach for computing the optimal policy parameters. In order to do so, a dedicated global chance-constraint and the respective filtering algorithm that enforce the required service level are presented. Our numerical examples show that a stochastic supplier lead-time significantly affects policy parameters with respect to the case in which the lead-time is assumed to be deterministic or absent.

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    Article provided by Elsevier in its journal International Journal of Production Economics.

    Volume (Year): 127 (2010)
    Issue (Month): 1 (September)
    Pages: 180-189

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    Handle: RePEc:eee:proeco:v:127:y:2010:i:1:p:180-189
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    1. Christopher Nevison & Michael Burstein, 1984. "The Dynamic Lot-Size Model with Stochastic Lead Times," Management Science, INFORMS, vol. 30(1), pages 100-109, January.
    2. Robert S. Kaplan, 1970. "A Dynamic Inventory Model with Stochastic Lead Times," Management Science, INFORMS, vol. 16(7), pages 491-507, March.
    3. Joseph A. Hunt, 1965. "Balancing Accuracy and Simplicity in Determining Reorder Points," Management Science, INFORMS, vol. 12(4), pages 94-103, December.
    4. James H. Bookbinder & Jin-Yan Tan, 1988. "Strategies for the Probabilistic Lot-Sizing Problem with Service-Level Constraints," Management Science, INFORMS, vol. 34(9), pages 1096-1108, September.
    5. Sridhar Bashyam & Michael C. Fu, 1998. "Optimization of (s, S) Inventory Systems with Random Lead Times and a Service Level Constraint," Management Science, INFORMS, vol. 44(12-Part-2), pages 243-256, December.
    6. Tempelmeier, Horst, 2007. "On the stochastic uncapacitated dynamic single-item lotsizing problem with service level constraints," European Journal of Operational Research, Elsevier, vol. 181(1), pages 184-194, August.
    7. Riezebos, Jan, 2006. "Inventory order crossovers," International Journal of Production Economics, Elsevier, vol. 104(2), pages 666-675, December.
    8. Tarim, S. Armagan & Smith, Barbara M., 2008. "Constraint programming for computing non-stationary (R, S) inventory policies," European Journal of Operational Research, Elsevier, vol. 189(3), pages 1004-1021, September.
    9. Tarim, S. Armagan & Kingsman, Brian G., 2004. "The stochastic dynamic production/inventory lot-sizing problem with service-level constraints," International Journal of Production Economics, Elsevier, vol. 88(1), pages 105-119, March.
    10. Gary D. Eppen & R. Kipp Martin, 1988. "Determining Safety Stock in the Presence of Stochastic Lead Time and Demand," Management Science, INFORMS, vol. 34(11), pages 1380-1390, November.
    11. Hayya, Jack C. & Bagchi, Uttarayan & Kim, Jeon G. & Sun, Daewon, 2008. "On static stochastic order crossover," International Journal of Production Economics, Elsevier, vol. 114(1), pages 404-413, July.
    12. Tarim, S. Armagan & Kingsman, Brian G., 2006. "Modelling and computing (Rn, Sn) policies for inventory systems with non-stationary stochastic demand," European Journal of Operational Research, Elsevier, vol. 174(1), pages 581-599, October.
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