Technical Note - On Optimal Policies for Inventory Systems with Batch Ordering

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Technical Note - On Optimal Policies for Inventory Systems with Batch Ordering

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Title: Technical Note - On Optimal Policies for Inventory Systems with Batch Ordering
Author(s):
Huh, Woonghee Tim;
Janakiraman, Ganesh
Format: text
Item Type: article
Keywords: Operations research
Management science
Inventory control
Abstract: We study a periodically reviewed multiechelon inventory system in series such that order quantities at every stage have to be multiples of a given stage-specific batch size. The batch sizes are nested in the sense that the batch size for every stage is an integer multiple of the batch size for its downstream stage. The problem is that of determining the policy that minimizes the expected discounted sum of costs over a finite horizon. The result is that an echelon 4R1nQ5 policy is optimal when demands are independent across periods or, more generally, Markov-modulated. We also comment on algorithmic implications of our result and on extensions. © 2012 INFORMS.
ISSN: 0030-364X
Persistent Link: http://dx.doi.org/10.1287/opre.1120.1060
http://hdl.handle.net/10735.1/3199
Terms of Use: © 2012 INFORMS

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