Computational issues in a stochastic finite horizon one product recovery inventory model

Computational issues in a stochastic finite horizon one product recovery inventory model

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Article ID: iaor20042450
Country: Netherlands
Volume: 146
Issue: 3
Start Page Number: 553
End Page Number: 579
Publication Date: May 2003
Journal: European Journal of Operational Research
Authors: ,
Keywords: programming: dynamic
Abstract:

Inderfurth and Simpson have shown how the optimal decision rules in a stochastic one product recovery system with equal leadtimes can be characterized. Using these results we provide in this paper a method for the exact computation of the parameters which determine the optimal periodic policy. Since exact computation is, especially in case of dynamic demands and returns, quite time consuming, we also provide two different approximations. One is based on an approximation of the value-function in the dynamic programming problem while the other approximation is based on a deterministic model. By means of numerical examples we compare our results and discuss the performance of the approximations.

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