Peeling layers of an onion: Inventory model with multiple delivery modes and forecast updates

Peeling layers of an onion: Inventory model with multiple delivery modes and forecast updates

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Article ID: iaor200298
Country: United States
Volume: 108
Issue: 2
Start Page Number: 253
End Page Number: 281
Publication Date: Feb 2001
Journal: Journal of Optimization Theory and Applications
Authors: , ,
Abstract:

This paper is concerned with a periodic review inventory system with fast and slow delivery modes and regular demand forecast updates. At the beginning of each period, on-hand inventory and demand information are updated. At the same time, decisions on how much to order using fast and slow delivery modes are made. Fast and slow orders are delivered at the end of the current and next periods, respectively. It is shown that there exists an optimal Markov policy and that it is a modified base-stock policy.

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