Article ID: | iaor20107386 |
Volume: | 58 |
Issue: | 5 |
Start Page Number: | 1414 |
End Page Number: | 1426 |
Publication Date: | Sep 2010 |
Journal: | Operations Research |
Authors: | Olsen Tava Lennon, Huggins Eric Logan |
Keywords: | expediting |
We consider a single-item, periodic-review inventory control problem in which discrete stochastic demand must be satisfied. When shortages occur, the unmet demand must be filled by some form of expediting; we allow a very general form for the cost structure of expediting. We explicitly consider the case where expedited production is allowed to produce up to a positive inventory level. We also consider the case where expedited production beyond the deficit is not permitted; an alternate application for this model is an inventory system with general lost sales costs. For the infinite-horizon discounted problem, we characterize the structure of the optimal stationary expediting policy and show that an (