Publication

Optimal Inventory Policies with Non-stationary Supply Disruptions and Advance Supply Information

2011
Talks

Abstract

We consider a periodic review, single-item, deterministic demand inventory model under non-stationary supply availability which has an all-or-nothing type of structure. Supply availability information is provided by the supplier which we refer as advance supply information (ASI). For a finite-horizon setting, we show the optimality of state dependent (s,S) policy. For the case with no fixed ordering cost we show the optimality of an order-up-to type policy and prove various properties of the optimal order-up-to levels. We provide a simple characterization of optimal order-up-to levels. For the model with fixed cost, a heuristic algorithm is proposed for finding a good ordering strategy.

Official source

https://infoscience.epfl.ch/entities/publication/ff1b47a3-82d6-47cd-92d8-24fd3c08f859

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2011
Talks

Abstract

Official source

https://infoscience.epfl.ch/entities/publication/ff1b47a3-82d6-47cd-92d8-24fd3c08f859

About this result

Related concepts (32)

Economic order quantity

Economic Order Quantity (EOQ), also known as Financial Purchase Quantity or Economic Buying Quantity (EPQ), is the order quantity that minimizes the total holding costs and ordering costs in inventory management. It is one of the oldest classical production scheduling models. The model was developed by Ford W. Harris in 1913, but R. H. Wilson, a consultant who applied it extensively, and K. Andler are given credit for their in-depth analysis.

Marginal cost

In economics, the marginal cost is the change in the total cost that arises when the quantity produced is incremented, the cost of producing additional quantity. In some contexts, it refers to an increment of one unit of output, and in others it refers to the rate of change of total cost as output is increased by an infinitesimal amount. As Figure 1 shows, the marginal cost is measured in dollars per unit, whereas total cost is in dollars, and the marginal cost is the slope of the total cost, the rate at which it increases with output.

Average fixed cost

In economics, average fixed cost (AFC) is the fixed costs of production (FC) divided by the quantity (Q) of output produced. Fixed costs are those costs that must be incurred in fixed quantity regardless of the level of output produced. Average fixed cost is the fixed cost per unit of output. As the total number of units of the good produced increases, the average fixed cost decreases because the same amount of fixed costs is being spread over a larger number of units of output.