TY - JOUR
T1 - Near-optimal (r,Q) policies for a two-stage serial inventory system with Poisson demand
AU - Yang, Lei
AU - Yang, Jian
AU - Yu, Gang
AU - Zhang, Hanqin
N1 - Funding Information:
Research supported in part by the Chinese National Science Foundation, a grant from the Social Science Foundation of the Ministry of Education of China (No. 09YJC630085), the Fundamental Research Funds for the Central Universities, SCUT (No. 2009SZ0022), and a Start-up Grant from the Business School, National University of Singapore, Singapore.
PY - 2011/10/10
Y1 - 2011/10/10
N2 - We consider a two-stage serial inventory system whose cost structure exhibits economies of scale in both stages. In the system, stage 1 faces Poisson demand and replenishes its inventory from stage 2, and the latter stage 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. We derive important properties for a given echelon-stock (r, Q) policy for an approximation of the problem where all states are continuous. Based on these properties, we design a simple heuristic algorithm that can be used to find a near-optimal (r, Q) policy for the original problem. Numerical examples are given to demonstrate the effectiveness of the algorithm.
AB - We consider a two-stage serial inventory system whose cost structure exhibits economies of scale in both stages. In the system, stage 1 faces Poisson demand and replenishes its inventory from stage 2, and the latter stage 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. We derive important properties for a given echelon-stock (r, Q) policy for an approximation of the problem where all states are continuous. Based on these properties, we design a simple heuristic algorithm that can be used to find a near-optimal (r, Q) policy for the original problem. Numerical examples are given to demonstrate the effectiveness of the algorithm.
KW - (r,Q) policy
KW - Algorithm
KW - Multi-echelon inventory
KW - Stochastic demand
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U2 - 10.1016/j.ijpe.2011.03.030
DO - 10.1016/j.ijpe.2011.03.030
M3 - Article
AN - SCOPUS:80051549071
SN - 0925-5273
VL - 133
SP - 728
EP - 735
JO - International Journal of Production Economics
JF - International Journal of Production Economics
IS - 2
ER -