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EOR
2006

Optimal and near-optimal policies for lost sales inventory models with at most one replenishment order outstanding

13 years 11 months ago
Optimal and near-optimal policies for lost sales inventory models with at most one replenishment order outstanding
In this paper we use policy-iteration to explore the behaviour of optimal control policies for lost sales inventory models with the constraint that not more than one replenishment order may be outstanding at any time. Continuous and periodic review, fixed and variable lead times, replenishment order sizes which are constrained to be an integral multiple of some fixed unit of transfer and service level constraint models are all considered. Demand is discrete and, for continuous review, assumed to derive from a compound Poisson process. It is demonstrated that, in general, neither the best (s, S) nor the best (r, Q) policy is optimal but that the best policy from within those classes will have a cost which is generally close to that of the optimal policy obtained by policy iteration. Finally, near-optimal computationally-efficient control procedures for finding (s, S) and (r, Q) policies are proposed and their performance illustrated.
Roger M. Hill, Søren Glud Johansen
Added 12 Dec 2010
Updated 12 Dec 2010
Type Journal
Year 2006
Where EOR
Authors Roger M. Hill, Søren Glud Johansen
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