Article ID: | iaor20164678 |
Volume: | 63 |
Issue: | 3 |
Start Page Number: | 585 |
End Page Number: | 601 |
Publication Date: | Jun 2015 |
Journal: | Operations Research |
Authors: | Chao Xiuli, Gong Xiting, Shi Cong, Zhang Huanan |
Keywords: | simulation, supply & supply chains, demand, combinatorial optimization, stochastic processes |
We develop the first approximation algorithms with worst‐case performance guarantees for periodic‐review perishable inventory systems with general product lifetime, for both backlogging and lost‐sales models. The demand process can be nonstationary and correlated over time, capturing such features as demand seasonality and forecast updates. The optimal control policy for such systems is notoriously complicated, thus finding effective heuristic policies is of practical importance. In this paper, we construct a computationally efficient inventory control policy, called the