IDEAS home Printed from https://ideas.repec.org/p/hhb/aarbls/2008-007.html
   My bibliography  Save this paper

Base stock policies with degraded service to larger orders

Author

Listed:
  • Du, Bisheng

    () (Department of Business Studies, Aarhus School of Business)

  • Larsen, Christian

    () (Department of Business Studies, Aarhus School of Business)

Abstract

We study an inventory system controlled by a base stock policy assuming a compound renewal demand process. We extend the base stock policy by incorporating rules for degrading the service of larger orders. Two specific rules are considered, denoted Postpone(q,t) and Split(q), respectively. The aim of using these rules is to achieve a given order fill rate of the regular orders (those of size less than or equal to the parameter q) having less inventory. We develop mathematical expressions for the performance measures order fill rate (of the regular orders) and average on-hand inventory level. Based on numerical experiments, our conclusion is that Split(q) seems to perform best.

Suggested Citation

  • Du, Bisheng & Larsen, Christian, 2008. "Base stock policies with degraded service to larger orders," CORAL Working Papers L-2008-07, University of Aarhus, Aarhus School of Business, Department of Business Studies.
  • Handle: RePEc:hhb:aarbls:2008-007
    as

    Download full text from publisher

    File URL: http://research.asb.dk/fbspretrieve/2997/L_2008_07.PDF
    Download Restriction: no

    References listed on IDEAS

    as
    1. Thomas, Douglas J. & Tyworth, John E., 2006. "Pooling lead-time risk by order splitting: A critical review," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 42(4), pages 245-257, July.
    2. Teunter, Ruud H. & Klein Haneveld, Willem K., 2008. "Dynamic inventory rationing strategies for inventory systems with two demand classes, Poisson demand and backordering," European Journal of Operational Research, Elsevier, vol. 190(1), pages 156-178, October.
    3. Rema Hariharan & Paul Zipkin, 1995. "Customer-Order Information, Leadtimes, and Inventories," Management Science, INFORMS, vol. 41(10), pages 1599-1607, October.
    4. Guillermo Gallego & Özalp Özer, 2001. "Integrating Replenishment Decisions with Advance Demand Information," Management Science, INFORMS, vol. 47(10), pages 1344-1360, October.
    Full references (including those not matched with items on IDEAS)

    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:hhb:aarbls:2008-007. 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: (Helle Vinbaek Stenholt). General contact details of provider: http://edirc.repec.org/data/ifhhadk.html .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.