Linear inflation rules for the random yield problem: Analysis and computations

Linear inflation rules for the random yield problem: Analysis and computations

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Article ID: iaor20101098
Volume: 58
Issue: 1
Start Page Number: 244
End Page Number: 251
Publication Date: Jan 2010
Journal: Operations Research
Authors: ,
Abstract:

In this paper, we propose a simple heuristic approach for the inventory control problem with stochastic demand and multiplicative random yield. Our heuristic tries to find the best candidate within a class of policies that are referred to in the literature as the linear inflation rule (LIR) policies. Our approach is computationally fast, easy to implement, and intuitive to understand. Moreover, we find that in a significant number of instances our heuristic performs better than several other well-known heuristics that are available in the literature.

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