Incorporating Order Crossover Information into Service-Oriented Base Stock Policy Decisions

Single-sourcing lost-sales inventory systems with lead times are notoriously difficult to optimize. In this paper, we propose a new family of capped base-stock policies and provide a new perspective on constructing a practical hybrid policy combining two well-known heuristics: base-stock and constant-order policies. Each capped base-stock policy is associated with two parameters: a base-stock level and an order cap. We prove that for any fixed order cap, the capped base-stock policy converges exponentially fast in the base-stock level to a constant-order policy, providing a theoretical foundation for a phenomenon by which a capped dual-index policy converges numerically to a tailored base-surge policy recently observed in other work in a different but related dual-sourcing inventory model. As a consequence, there exists a sequence of capped base-stock policies that are asymptotically optimal as the lead time grows. We also numerically demonstrate its superior performance in general (including small lead times) by comparing it with otherwell-known heuristics.

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Networked base-stock policy for continuous-review goods distribution systems with uncertain demand

2017 21st International Conference on System Theory, Control and Computing (ICSTCC) ◽

10.1109/icstcc.2017.8107069 ◽

2017 ◽

Cited By ~ 1

Author(s):

Przemyslaw Ignaciuk

Keyword(s):

Distribution Systems ◽

Base Stock ◽

Uncertain Demand ◽

Continuous Review ◽

Base Stock Policy ◽

Stock Policy

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Analysis of lead time correlation under a base-stock policy

European Journal of Operational Research ◽

10.1016/j.ejor.2019.01.029 ◽

2019 ◽

Vol 276 (2) ◽

pp. 519-535 ◽

Cited By ~ 2

Author(s):

Tim Hellemans ◽

Robert N. Boute ◽

Benny Van Houdt

Keyword(s):

Lead Time ◽

Time Correlation ◽

Base Stock ◽

Base Stock Policy ◽

Stock Policy

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Optimization and Customer Utilities under Dynamic Lead Time Quotation in an M/M Type Base Stock System

Mathematical Problems in Engineering ◽

10.1155/2017/5805404 ◽

2017 ◽

Vol 2017 ◽

pp. 1-10 ◽

Cited By ~ 2

Author(s):

Koichi Nakade ◽

Hiroki Niwa

Keyword(s):

Waiting Time ◽

Lead Time ◽

Inventory System ◽

Base Stock ◽

Base Stock Policy ◽

Optimal Policies ◽

Optimal Dynamic ◽

System Information ◽

Lead Time Quotation ◽

Stock Policy

In a manufacturing and inventory system, information on production and order lead time helps consumers’ decision whether they receive finished products or not by considering their own impatience on waiting time. In Savaşaneril et al. (2010), the optimal dynamic lead time quotation policy in a one-stage production and inventory system with a base stock policy for maximizing the system’s profit and its properties are discussed. In this system, each arriving customer decides whether he/she enters the system based on the quoted lead time informed by the system. On the other hand, the customer’s utility may be small under the optimal quoted lead time policy because the actual lead time may be longer than the quoted lead time. We use a utility function with respect to benefit of receiving products and waiting time and propose several kinds of heuristic lead time quotation policies. These are compared with optimal policies with respect to both profits and customer’s utilities. Through numerical examples some kinds of heuristic policies have better expected utilities of customers than the optimal quoted lead time policy maximizing system’s profits.

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Joint Pricing and Inventory Replenishment Decisions with Returns and Expediting under Reference Price Effects

Mathematical Problems in Engineering ◽

10.1155/2019/3479678 ◽

2019 ◽

Vol 2019 ◽

pp. 1-17

Author(s):

Yuan Li ◽

Yumei Hou

Keyword(s):

Reference Price ◽

Base Stock ◽

List Price ◽

Optimal Pricing ◽

Threshold Policy ◽

Inventory Replenishment ◽

Base Stock Policy ◽

Price Effects ◽

Joint Pricing ◽

Stock Policy

This paper considers a single-item joint pricing and inventory replenishment problem under reference price effects in consecutive T periods. Demands in consecutive periods are sensitive to price and reference price with general demand distribution. At the end of each period, after the demand realization, a firm can return excess stocks to a supplier or place an expediting order to reduce the loss by shortage. Unfilled demands are fully backlogged. In order to maximize the total expected discounted profit with reference price effects the optimal pricing and inventory replenishment policies for regular order and the inventory adjustment decisions for returning/expediting are derived. The optimal replenishment policy for regular order is a base-stock policy, the optimal pricing policy is a base-stock-list-price policy, and the optimal policy for returning/expediting inventory adjustment follows a dual-threshold policy. Furthermore, the analysis of the operational impacts (from the perspective of adding returning/expediting and reference price effects, respectively) is researched. Numerical results also show that considering both returning/expediting and reference price effects is more profitable than considering only one of them.

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