Optimal inventory policy for a dynamic stochastic inventory problem with order revision

A buyer wishes to satisfy independent demands for a product by ordering the product from a supplier. The buyer places an order one period before delivery and the supplier allows the buyer to revise the size of order before delivery. The buyer seeks an ordering and order-revision policy with minimum...

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Bibliographic Details
Published in:Optimization letters Vol. 11; no. 7; pp. 1489 - 1497
Main Author: Xu, Ningxiong
Format: Journal Article
Language:English
Published: Berlin/Heidelberg Springer Berlin Heidelberg 01.10.2017
Subjects:
Computational Intelligence
Mathematics
Mathematics and Statistics
Numerical and Computational Physics
Operations Research/Decision Theory
Optimization
Short Communication
Simulation
Inventory control
Order revision
Stochastic dynamic programming problem
Optimal policy
ISSN:1862-4472, 1862-4480
Online Access:Get full text
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Summary:A buyer wishes to satisfy independent demands for a product by ordering the product from a supplier. The buyer places an order one period before delivery and the supplier allows the buyer to revise the size of order before delivery. The buyer seeks an ordering and order-revision policy with minimum expected cost over a finite time horizon. The structure of the buyer’s optimal ordering and order-revision policy is developed under the assumptions about the ordering costs, the storage and shortage costs, and the revision that the supplier allows and the charges the supplier imposes.
ISSN:1862-4472
1862-4480
DOI:10.1007/s11590-016-1100-y