Fractional programming approach to two stochastic inventory problems

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalNot applicablepeer-review

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Detail(s)

Original languageEnglish
Pages (from-to)63-71
Journal / PublicationEuropean Journal of Operational Research
Volume160
Issue number1
Publication statusPublished - 1 Jan 2005
Externally publishedYes

Abstract

This paper considers two popular inventory models: the continuous review and periodic review reorder-point, order-quantity, control systems. Specifically we present two procedures which determine optimal values for the two control parameters (i.e., reorder-point and order-quantity) when the holding-and-shortage costs are non-quasi-convex. This cost structure may arise when non-linear cost rate is considered, for instance when the shortage cost is the shadow cost of a service-level constraint. The algorithms based on a fractional programming method are intuitive and efficient, and as the holding-and-shortage cost functions become quasi-convex, they are compatible to existing algorithms. © 2003 Elsevier B.V. All rights reserved.

Research Area(s)

  • Batch ordering, Fractional programming, Inventory model, Reorder-point lot-sizing policy