94%-Effective Policies for a Two-Stage Serial Inventory System with Stochastic Demand
A two-stage inventory system is considered where Poisson demand occurs at Stage 1, and Stage 1 replenishes its inventory from Stage 2, which in turn orders from an outside supplier with unlimited stock. Each shipment, either to Stage 2 or to Stage 1, incurs a fixed setup cost. Under the assumption that the supply leadtime at Stage 2 is zero, we characterize a simple heuristic policy whose long-run average cost is guaranteed to be within 6% of optimality, i.e., a 94%-effective policy. The paper also provides heuristic policies for more general inventory systems and reports computational results.
Volume (Year): 45 (1999)
Issue (Month): 12 (December)
|Contact details of provider:|| Postal: 7240 Parkway Drive, Suite 300, Hanover, MD 21076 USA|
Web page: http://www.informs.org/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Andrew J. Clark & Herbert Scarf, 2004.
"Optimal Policies for a Multi-Echelon Inventory Problem,"
INFORMS, vol. 50(12_supple), pages 1782-1790, December.
- Andrew J. Clark & Herbert Scarf, 1960. "Optimal Policies for a Multi-Echelon Inventory Problem," Management Science, INFORMS, vol. 6(4), pages 475-490, July.
- Fangruo Chen & Yu-Sheng Zheng, 1994. "Lower Bounds for Multi-Echelon Stochastic Inventory Systems," Management Science, INFORMS, vol. 40(11), pages 1426-1443, November.
- Antony Svoronos & Paul Zipkin, 1991. "Evaluation of One-for-One Replenishment Policies for Multiechelon Inventory Systems," Management Science, INFORMS, vol. 37(1), pages 68-83, January.
- Fangruo Chen & Yu-Sheng Zheng, 1994. "Evaluating Echelon Stock (R, nQ) Policies in Serial Production/Inventory Systems with Stochastic Demand," Management Science, INFORMS, vol. 40(10), pages 1262-1275, October.
- Yu-Sheng Zheng, 1992. "On Properties of Stochastic Inventory Systems," Management Science, INFORMS, vol. 38(1), pages 87-103, January.
- Kamran Moinzadeh & Hau L. Lee, 1986. "Batch Size and Stocking Levels in Multi-Echelon Repairable Systems," Management Science, INFORMS, vol. 32(12), pages 1567-1581, December.
- Marc A. De Bodt & Stephen C. Graves, 1985. "Continuous-Review Policies for a Multi-Echelon Inventory Problem with Stochastic Demand," Management Science, INFORMS, vol. 31(10), pages 1286-1299, October.
- Paul Zipkin, 1986. "Inventory Service-Level Measures: Convexity and Approximation," Management Science, INFORMS, vol. 32(8), pages 975-981, August.
- Peter L. Jackson, 1988. "Stock Allocation in a Two-Echelon Distribution System Or "What to Do Until Your Ship Comes In"," Management Science, INFORMS, vol. 34(7), pages 880-895, July. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:45:y:1999:i:12:p:1679-1696. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.