IDEAS home Printed from https://ideas.repec.org/a/sen/rebelj/vlviy2011i3p345-375.html
   My bibliography  Save this article

Optimal Pooling of Inventories with Substitution: A Literature Review

Author

Listed:
  • Y. Deflem
  • I. Van Nieuwenhuyse

Abstract

In many inventory management systems, some kind of substitution flexibility exists, meaning that a substitute or more flexible item can be used (at an additional cost) when the preferred product stocks out. Through the use of substitution flexibility, we can take advantage of the risk pooling effect on the flexible item. Since risk pooling reduces total inventory holding costs, a trade-off between inventory holding costs and flexibility costs will determine the optimal inventory control parameters for the different items. In this research paper, we focus on different types of inventory management systems with substitution flexibility, and discuss three methods suggested in the literature (i.e., newsvendor models, Monte Carlo simulation and continuoustime Markov chains) in order to optimally exploit substitution flexibility.

Suggested Citation

  • Y. Deflem & I. Van Nieuwenhuyse, 2011. "Optimal Pooling of Inventories with Substitution: A Literature Review," Review of Business and Economic Literature, Intersentia, vol. 0(3), pages 345-375, September.
  • Handle: RePEc:sen:rebelj:v:lvi:y:2011:i:3:p:345-375
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jie Zhang & Weijun Xie & Subhash C. Sarin, 2021. "Multiproduct Newsvendor Problem with Customer-Driven Demand Substitution: A Stochastic Integer Program Perspective," INFORMS Journal on Computing, INFORMS, vol. 33(3), pages 1229-1244, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sen:rebelj:v:lvi:y:2011:i:3:p:345-375. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Petra Van den Bempt (email available below). General contact details of provider: http://www.rebel-journal.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.