Article ID: | iaor200973323 |
Volume: | 57 |
Issue: | 6 |
Start Page Number: | 1384 |
End Page Number: | 1393 |
Publication Date: | Nov 2009 |
Journal: | Operations Research |
Authors: | Janakiraman Ganesh, Muckstadt John A |
Keywords: | inventory |
We study a class of two-echelon serial systems with identical ordering/production capacities or limits for both echelons. Demands are assumed to be integer valued. For the case where the lead time to the upstream echelon is one period, the optimality of state-dependent modified echelon base-stock policies is proved using a decomposition approach. For the case where the upstream lead time is two periods, we introduce a new class of policies called ‘two-tier base-stock policies,’ and prove their optimality. Some insight about the inventory control problem in